Cape Coral Florida's Real Estate Guide

So talking to your lender and trying to sell your home via short sale didn't work...what is there left to be done to avoid foreclosure? You can try to consult with your bank in one last attempt to avoid the foreclosure of your home.

Option III: Consult With Your Lender To Pursue A Deed In Lieu of Foreclosure (DIL)

With a DIL, you leave your home in move-in ready condition and turn over the keys to the bank. The bank in turn writes off the loan, packages these loans into REO packages, and lets real estate agents sell them off. So why would a bank consider a DIL? Part of the reason is that they get the property back in better condition and they avoid the expense of foreclosure. However, the more resources that the bank has put into the foreclosure (attorney fees, service fees, court fees, etc.), the less likely they are to do a DIL. They will have to buy the house back and lose the money on the loan anyway.

It is so important to be in constant contact with your lender when you are defaulting on your payments. By letting them know your intentions and plans, you are more likely to get their cooperation when it comes to negotiating a short sale or getting a DIL. If your main goal is to preserve your credit, be forewarned that a DIL puts a heavier penalty on your credit than a short sale. However, it is much better than a foreclosure. If you can avoid foreclosure, you have a much better chance of owning another home, one that you can afford, within a couple of years.

If you've tried to negotiate your home loan with your lender unsuccessfully or are too far gone for that to be an option for you, the next option you have involves the sale of your home. What's important right now is protecting your credit by avoiding foreclosure at all costs.

Option II: Sell Your Home Quickly Through a Short Sale

A short sale is when an investor negotiates with the bank for a discounted rate on the home and you are able to get out of the mortgage. It seems like everybody with a little bit of money in the bank has latched onto the idea of investing in a short sale. Ultimately, it doesn't matter to you whether this is an investor's first of fiftieth short sale as long as the sale goes through. Be advised that you are much better off with an experienced investor. It is wise to get the help of a real estate professional with lots of experience in short sales so that they can connect you with quality investors. When interviewing potential investors, ask them how many short sales they've completed. There is so much that can go wrong with a short sale that it is highly advantageous to have a great real estate agent and experienced investor behind you.

A short sale occurs when the bank takes a percentage of the outstanding balance from an investor as satisfaction for the loan. The problem is that the bank wants this percentage to be as close to 100 percent as possible and many investors are under the false impression that they can get homes for 40 percent. It's a myth to believe that the bank does not want your house. It's true that banks didn't get into the loan business to control real estate. However, what's most important to a bank's shareholders is whether the loans are performing and whether the bank is going to make a profit that quarter. If your loan isn't performing, the bank is going to want to get you back on track with your loan or sell your house, but not at 40 percent.

Be prepared for the fact that even if you find an experienced real estate agent and short sale investor, a short sale might not work for you. The bank may just be plain stubborn and unwilling to accept any of the offers that you place on the table. Also, you could simply run out of time to get the sale transaction completed. If this is the case, you still have an option left that can keep you from foreclosure proceeding. Check back soon to find out what that is and how it might be able to help you!

If you want to get out of foreclosure and protect your credit, the worst thing you can do is to sit back and not do anything. You absolutely must have a plan! Over the course of this series, I will show you three ways that you can avoid foreclosure, save your credit score, and possibly keep your home. If you are currently behind in your mortgage payments, you are receiving notices from the bank on a regular basis. This is where your first option comes into play.

Option I: Contact Your Lender and Attempt To Work Out A Payment Plan To Keep Your Home

In order for this to work, you must respond to the phone calls and letters that you are receiving from your lender. More and more lenders these days are implementing loan modification plans to stem the rising rate in foreclosures. They are literally begging you to call them! Your bank may be willing to reduce your interest rate, adjust the length of your loan, and/or reduce the principal amount of your loan so that you can remain in your home.

If you don't feel comfortable haggling with your lender yourself, you can enlist the help of a Foreclosure Specialist. A foreclosure specialist can help you to keep your home by assisting you with coming up with a plan of action and negotiating on your behalf with your lender. These services are not free but they are less expensive than hiring a lawyer who specializes in Foreclosure Law or even worse, doing nothing and losing your home and ruining your credit.

Communication with your lender is key and it is the best first step you can take to stay out of foreclosure. If your situation has escalated past the point of negotiating with your lender, check back here to read the remainder of this series to learn about additional options for you.

Have you modified your home loan terms through your lender or a third party counselor?

Has your home been foreclosed upon and sold at auction?

Have you sold your home via a short sale to avoid foreclosure?

If your answer is yes to any of the above questions then you need to know about deficiency judgments. A deficiency judgment is the amount between what the bank was able to get for your home and the total mortgage owed. In many states, banks have the right to sue you for difference between the two amounts. Not every homeowner who goes through a foreclosure ends up with a deficiency judgment and not every homeowner who gets their loan modified is in the clear. It is very hard to determine in advance whether you will be faced with a deficiency judgment.

If your house is actually foreclosed upon and sold at a Sheriff's auction, the bank may be able to pursue a deficiency judgment against you. In Florida, banks are permitted to pursue a deficiency judgment against you under certain circumstances. However, even when the circumstances permit it, the bank does not always pursue the deficiency judgment. It has already cost the bank thousands of dollars to foreclose on your home. In addition to that, they have already lost the amount of the deficiency. If the home was your primary residence and not an investment property, the bank assumes that you would have continued to make your payments had you had the resources to do so. Therefore, it would not make sense for them to file a deficiency judgment against you. It would just cost them additional money in attorney's fees and they will not be able to collect that either.

However, the banks know that there are some people that it makes sense to go after. An investor who walks away from a property might have other property, including their residence, to attack. If the bank does file for a deficiency judgment, they can execute against your property and get a wage garnishment to take up to half of your earnings. Many people who find themselves with a deficiency judgment file for bankruptcy protection.

If you have recently been through a foreclosure or short sale and are looking for a property in Cape Coral, Ft. Myers, Bonita Springs or Estero to rent until you are able to buy again, contact me to help you find a great rental property that fits your needs and budget.

Mortgage rates have been falling recently. If you, like many homeowners today, are wondering how you can take advantage of these new, low rates pay close attention. Consider refinancing your home to get a lower mortgage rate on your Cape Coral home. Refinancing is like buying your home all over again so many of the requirements you needed to meet in order to purchase your home will need to be met in order to refinance.

First of all, you will need credit. A score of 760 or higher will ensure that you get the best mortgage rate available. You will also need proof of income. If you have become unemployed recently, you will need to establish new employment in order to refinance. Lastly, you will need collateral in the form of equity in your home. If you can meet all of these requirements, then you should take the next step and talk to your mortgage lender about refinancing your home. It could mean a huge savings for you and make your home that much affordable to you.