Many people in Florida these days are walking a financial tightrope and they may be worried about one of their most important assets — their house — especially if the bank starts threatening foreclosure. However, there are some alternatives to foreclosure that may be able to save their credit, even if they cannot save their home.
Selling your home before you go underwater
If your home is worth more than what you owe and you are not behind on your mortgage payments yet, you could try simply selling your home. While this means you will not have your home anymore, it can protect your credit and provide you with the financial resources needed to start over with a new, more affordable, residence.
Short sales when you are underwater
If your home is worth less than what you owe, you might want to consider a short sale. In a short sale, the bank agrees to accept less than what you owe on the home by selling the home to a third party. A specialist will make a deal with the bank to sell the home for whatever it is currently worth on the market. If this amount is less than what the homeowner owes, the bank gets the proceeds from the sale and then extinguishes any remaining debt.
Generally, a short sale is only an option if you can prove hardship to the bank and it can take longer to complete than a standard sale. And, while a short sale will affect your credit, this effect is not as great as it would be to have a foreclosure on your credit record.
Deed in lieu of foreclosure agreements
A deed in lieu of foreclosure is a financial deal between the bank and homeowner that effectively ends the mortgage. Essentially you and the bank are agreeing to forgo lengthy foreclosure proceedings by you voluntarily giving turning the deed to your home over to the bank. That being said, if your home is worth significantly less than what you owe, the bank may still require you to pay back at least a part of the balance on the mortgage.
You may not save your home, but you could protect your credit
While these alternatives to foreclosure will not allow you to keep your home, they could protect your credit making it easier for you to find affordable housing moving forward. If you have questions about these alternatives to foreclosure or questions about foreclosure itself, you may want to bring your concerns to a real estate attorney in the New Port Richey area for further information.