It has been quite some time since you received a bank loan to purchase your dream home in New York. Initially, you repaid the monthly installments promptly; however, the entire scenario changed in the aftermath of the global financial crisis of 2008. Many people like you either lost their jobs or found that their pay scale had been reduced. Apart from this, the prices of essential commodities were on the rise. This left you in a financial crisis and you now have problems paying off your loan. In such a situation, the bank will sell your property to recover the loan amount; this procedure is known as foreclosure. However, you can avoid having your home sold by the bank by opting for foreclosure alternatives.
There are several foreclosure alternatives available to you. You can select the one that suits you best. One of the best options is to rent out the property at a monthly rental rate that is higher than the loan amount you have to pay to the bank. Not only will this option help you to pay off your loans, but it will also provide you with a steady cash flow every month provided you charge a decent amount for rent. This option is best for those who purchased property when their prices were at an all-time low. You can also opt for deed in lieu of foreclosure. In such a scenario, you release yourself from the mortgage by transferring the ownership of your house (property) to the owner of your mortgage. This method also provides you with several advantages. One of them is that you will be in a better position to purchase another home later on.
If you so want, you also have the option to file for bankruptcy in court. Bankruptcy is the legal status of an organization or individual who does not have the means to repay the debts that it owes to its creditor. Another lucrative option for you is to sell to investor. Search online. You will find countless real estate investors who are on the lookout for such property. Get in touch with a few of them, and provide them with the details of your property. Wait for their feedback, and sell your property to the one who offers you the most suitable terms and is most professional.
However, there might be occasions when the money you own to your borrower is more than the current value of your home; this holds true for those who purchased property when the prices were at their peak particularly before the economic crisis of 2008. The best alternative for such individuals is to take the short sale route. In this procedure, you sell your house for an amount that is lower than the amount remaining on your mortgage. However, in order to carryout a short sale, your mortgage company must agree to it.
If you find a lender who is willing to offer you a lower interest rate, you can refinance your loan with them. By doing so, you will decrease the monthly installment payment due to the lower interest rate. Make sure that you do not opt for a floating interest rate. It is wiser to go for a fixed rate loan. If you are fortunate enough to have sold your property and do not have enough cash to purchase a new home immediately, you can opt for the lease option. However, if you still have possession of your home and plan to use its value to secure a loan, make sure that the outstanding balance on your home’s loan is less than the amount you are requesting, or else, you will not get the loan due to negative equity. Apart from this, if you plan to purchase a home, chances are that the lender will request you to opt for a home purchase loan that has a higher balance compared to the free market value of the house. This is known as under water mortgage. This option stops the owner of the house from selling the same unless he has sufficient money to pay for the loss. These are some of the options available for individuals facing foreclosure and want to avoid it.