What to Do When Mortgage Refinancing Options are Limited
No one enters a mortgage planning to head into foreclosure. When you sit at the table at closing, your primary feelings should include optimism and excitement about your new dwelling, as you focus on ways you plan to make this new house into your home. However, there are many situations in which people fall behind their traditional mortgages, such as terminated employment, unexpected health conditions, the death of a spouse, or a pending divorce. If you find yourself falling farther and farther behind on your mortgage payments, it is time to take charge of your situation before you end up in front of a judge in a foreclosure proceeding. Amansad Financial can help you with two alternatives that have worked for many of our other clients: finding a private mortgage and selling the house to an investor who will allow you to set up a lease-purchase arrangement on it.
A private mortgage has several benefits and drawbacks. On the plus side, a private mortgage gives you some breathing room by starting your loan over. Your credit score does not suffer any additional damage, because the funds from your private mortgage satisfy the note on which you were falling behind. On the minus, a private mortgage has a shorter term and higher interest rates than a traditional mortgage. This means that your payments are likely to be higher, and the patience of your lender is likely to be significantly shorter.
(Getting a Private Mortgages vs. Becoming a Tenant Buyer On Your Own Home)
Tenant Buyer:
Selling your home and setting up a lease purchase arrangement with the purchaser has potential positives and negatives as well. On the positive side, you also get off the hook as far as credit reporting goes on your original mortgage. You don’t face the short clock of a private mortgage that could lead you to a foreclosure proceeding in a few short months, because of the higher payments that you will have to make. On the negative side, you stop building equity in the home immediately, because you are no longer the owner. Instead, you are pouring rent into the house you used to own, and the new seller has a lot of leeway as far as the way he sets up your lease. While the term of this agreement is also generally short, your risk is less, because while you do end up walking away from the home if you don’t agree on a purchase amount, you do not have a foreclosure on your credit report.
Both alternatives offer you the chance to stay in your home longer, helping you avoid the costs of moving. If you have a three- or four-bedroom home with several children, the move itself can cost over $1,000, so this is not an insignificant consideration. You also receive the emotional benefits that come with the stability of keeping your family in the same house over time.
If you are interested in pursuing Amansad’s Rent-to-Own program, there are several facts you need to know. First of all, while Amansad has satisfied clients all over Western Canada, this program is only available in Alberta, because of variations in provincial law. Amansad’s program does not permit rural properties in this program, unless you have at least 25 percent equity before initiating the sale. You have to be able to verify your income by showing documentation from your employer. In any case, you need a minimum of 10 percent equity to move forward in any event. The terms only range between two and five years, meaning that you need to have the means to get the money in place to buy the home back in a few short years.
If you are running into trouble with your existing mortgage, then you definitely want to consider the advice in this article. You want to take any remedies available to you that keep you from encountering foreclosure. Once you go through that process, the damage to your credit report is virtually unchangeable. Because the immediate risks are not so dire, give the Amansad Rent-to-Own idea some definite consideration. Even if it means temporarily losing ownership of your home to someone else, the lease purchase arrangement allows you to consider purchasing the home back when you’ve built up some more savings. Either of these short-term solutions is a much better alternative to the damage that foreclosure can have on your credit.