Illinois Alternatives To Foreclosure
When facing foreclosure it is important to know you have options. Remember that when you are in foreclosure, or on the verge of foreclosure, you still own the property and will need to make your decisions as such.In the state of Illinois the foreclosure process from start to finish will take about a year from the time of the first missed payment. By the time a homeowner has received a Notice of Default (the official notice that the foreclosure process has or will begin) it can take 200 to 250 days. This gives the homeowner approximately a whole year to address the issue and fix the problem!!!
Listed below are 9 options you have when facing foreclosure. Huntley Short Sale Agent can go over all of these with you.
1. Do Nothing: If a homeowner does nothing, they will most likely lose their home in foreclosure. The bank/lender will go through the foreclosure process legally and then repossess your property. If you are still living in the property at the time of repossession then you will be eventually evicted from your property. Your credit rating will get hit with Foreclosure.
2. Payoff/Refinance: Completely paying off the entire loan amount plus any default amount and fees. Usually this is accomplished through refinancing your debt obligations to your lender. A higher interest rate is likely on the new debt and there may be a prepayment penalty because of recent default. This option can work if you have a sufficient amount of equity in the home and if your credit is still in good standing.
3. Reinstatement: Paying the entire default amount plus interest, attorney fees, late fees, taxes, missed payments and fees.
4. Loan Modification: Utilizing the existing mortgage company to refinance the debt or extend the terms of the loan. This may allow the homeowner to catch up at a more affordable level. To qualify, you must prove to the lender you have fixed the problem that caused the late payment.
5. Forbearance: Lender may be able to arrange a repayment plan based on the homeowner’s financial situation. The lender may even be able to provide a temporary payment reduction or suspension of payments. Information will be required from the lender to show that you are able to meet the new payment plan requirements.
6. Partial Claim: A loan from the lender for a 2nd loan to include back payments, costs, and fees.
7. Deed in Lieu of Foreclosure: Give the property back to the bank instead of the bank foreclosing. Banks generally require the home be well maintained, all mortgage payment and taxes must be current. This will come up on a credit report.
8. Bankruptcy: This option can liquidate debt and/or allow more time. We can refer you to a qualified bankruptcy attorney.
–Chapter 7(liquidation) To completely settle personal debt.
–Chapter 13(Wage Earner Plan) payments are made toward a plan to pay off debts in 3-5 years.
–Chapter 11(Business Reorganization) A business debt solution.
This is the one that Huntley short sale agent thinks is your best option.
9. Sale: If the property has equity (money left over after all loans, fees, taxes, and commissions are paid) then you can try and sell your property in the market. The homeowner may sell the home without lender approval through a conventional home sale. In this case, the homeowner may even get cash back from the sale if the sale price more than covers all of the debt and expenses.
However, if your property is now worth less than what the market will pay for the property given the current conditions. Then, you will need to perform a Short Sale or Pre-Foreclosure Sale on your property. That is where Huntley short sale agent can help.
In a short sale/Pre-foreclosure sale your loan is re-negotiated with your lender by your Real Estate Agent in order to get the lender to accept a purchase price which is less than what your loan obligation is. The purchase price of your property in a Short Sale/Pre-Foreclosure sale is based on the Current Market Value rather then the total amount owed on the Mortgage(s). Let the Huntley short sale agent go over the process with you so you understand all your options.