Yes, there are a few alternatives. Loan modifications could be helpful to a great many, but reports from several of our clients say it’s not as easy as that. Many banks are simply saying “sorry”. In fact, some of our clients could actually now afford their homes they’re in. say they bought for 650,000, and now their adjustable loan continues to adjust right out of their financial reach, as an example. Well, NOW that same house is worth 350,000 and with the conforming loan rates where they are now, they could actually afford to buy their home back, well, that is if they weren’t already in it. What a situation.
Well, there may be another option for a few homeowners. If you owe close to what you can sell your house for (admittedly rare in many areas now), think about a lease option/equity share arrangement.
What if someone took over your payments? They could get the tax advantages of homeownership, you would get out from under your payments without a credit damaging short sale or foreclosure and then in 3-5 years, the house sells, and you split whatever equity has accumulated (assuming the market comes back in 3-5 years). That is a bit of a simplified view, but that’s the gist.
Yes, taking over someone’s payments is more expensive than a traditional lease. But you are getting tax benefits (check with your accountant) and you are earning equity – not something you can do in a traditional lease. Since most 80/20 and 100% loan programs are gone or very restrictive, it’s a way to get into homeownership without a down payment, and without the rigors of bank qualifying. Yes you’d still have to qualify as a “renter” but it is often more forgiving than a bank in most situations.
REMEMBER a short sale is not the answer for all. In some cases, can yield some very damaging results (recourse, taxes, judgments, bad credit, etc.). Foreclosure may also yield some big surprises later – do you have more than one loan? Remember, only one loan is typically foreclosed upon. If your first foreclosed, do you know your 2nd can still go after you? Always work with professionals in negotiating a short sale. An experienced short sale specialist may be able to negotiate out some of these unfortunate surprises. Please ALWAYS check with a professional as a short sale is not for everyone, and a foreclosure may not be the end of your problems.
