Avoiding Foreclosure

Are you behind in your mortgage payments, or concerned that you soon might be?

Have you received a preforeclosure letter from your lender?

First of all, don't be ashamed. Millions of homeowners are in your situation – many times through no fault of their own. A job loss, a serious illness or other circumstances can put you in danger of foreclosure.

The economic downturn has led to many homeowners being "under water" in their loans, meaning they owe more than the home is worth, making it impossible to refinance.

If you've become one of those millions, don't panic. Foreclosure, and its accompanying effect on your credit, is not inevitable. There are many options out there, and your circumstances may make one of those options feasible and desirable for you.

To keep your options alive, you need to communicate with your lender. Many homeowners have lost their homes to foreclosure without ever having contacted the bank.

This would also be a good time to consult with a tax advisor and a Seasons Realty agent. Thousands of Seasons Realty agents are trained in working with distressed properties, and will be able to help you explore options other than foreclosure.

Many lenders would rather not foreclose. They take a large financial hit on a foreclosure. So in many cases, they'll consider alternatives. Some of these options may keep you in your home.

Loan Modification

While only certain homeowners will be able to take advantage of this alternative, it is your best option because it keeps you in your home and preserves your credit rating.

Your lender may be willing to modify the terms of the loan, whether it's reducing the principal, lowering the interest rate or other creative strategies to make the loan affordable for you. As part of the stimulus package, the U.S. government has programs to provide incentives for banks that use this strategy as an alternative to foreclosure.

Short Sales

This is the fastest-growing foreclosure alternative. Many banks will allow a short sale, in which the home sells for less than the amount of the loan. This is attractive for lenders because they lose less money than in a foreclosure. Also, short sales generally take less time than foreclosures, so the banks don't have to carry the properties on their books as liabilities.

And it's attractive for homeowners because the impact on their credit is far less than in a foreclosure. It stays on their credit reports for only two years, as opposed to seven years for a foreclosure, and often isn't a barrier to purchasing another home.

Short sales are paperwork-intensive, and there are many, many details involved. If you're considering this option, it's critical to work with a trained real estate agent who knows all the steps required to successfully complete a short sale.

Find a Seasons Realty agent in your area.

Keep in mind that no matter which option you choose, there may be tax and other financial consequences. You should consult with a tax advisor or legal expert.

Foreclosure (Cash for Keys)

One of the biggest problems in foreclosures is that homeowners sometimes physically damage the property, or even sell some of the fixtures, before leaving. Needless to say, this is not a good idea. It may expose the homeowners to financial and legal liability. It also makes the properties much more difficult to sell.

To prevent this, some lenders offer a program called "Cash for Keys." The homeowners receive a check for vacating the property within a certain time period and leaving it in good condition. If you have no alternative other than foreclosure, you should ask the bank about this option.

Tips From HUD

The U.S. Department of Housing and Urban Development has 10 tips for avoiding foreclosure:

1.Don't ignore the problem.

2.Contact your lender as soon as you realize you have a problem.

3.Open and respond to all mail from your lender.

4.Know your mortgage rights.

5.Understand foreclosure prevention options.

6.Contact a HUD-approved housing counselor.

7.Prioritize your spending.

8.Use your assets.

9.Avoid foreclosure prevention companies.

10.Don't lose your house to foreclosure recovery scams.

Additional resources to help you avoid foreclosure.

Working with your Agent Selecting the right real estate agent to help you buy or sell your home is essential to a smooth transaction. For the best possible experience, you should consider a professional's background, personality and responsiveness.

Here are some tips to help you choose and work with your real estate agent.

How to choose a real estate agent

1. Consumers who do their homework can save thousands of dollars and experience a smooth transition. So don't waste time and resources – decide what's most important to you, and then find a professional who specializes in that area. A Seasons Realty agent can help you no matter what your needs are.

2. Ask friends and family members for referrals. Someone you know and trust may have a Seasons Realty agent in mind to help you meet your real estate goals.

3. If you've already determined where you'd like to live, drive through neighborhoods in the area and survey them for REALTOR® yard signs. Seeing the same name pop up on signs time after time may indicate that the agent is a specialist in the area. If you're thinking about selling, monitor the signs in your own neighborhood.

4. Moving far away? Right here on remax.com, you can connect with a RE/MAX agent around the world who can offer great expertise and service. Consider services they offer, additional certifications, any specialties, and languages they speak. You'll find the right professional to meet your real estate needs no matter where your home search takes you.

What to ask in the interview

1. If selling, ask the real estate agent how he or she would establish a listing price. Request a Comparative Market Analysis, also called a CMA, which shows the market value of similar homes in the area that are for sale or have recently sold.

2. Ask the agent how he or she would market your property. Understand that some agents may prefer to first tour your home and then put together a customized marketing plan to present at a later meeting. But if he or she can't suggest a strategy when asked, you might consider interviewing other candidates.

3. Ask the agent how often you should expect to hear from him or her. Know how and when you will communicate to avoid unrealistic expectations.

4. Ask how long the agent has been licensed and how many buyers and sellers he or she has helped.

5. Ask about designations. Interest in continuing education is a strong indicator of motivation and professionalism.

6. Pay attention to the agent's listening skills. Does he or she cut you off before you've finished a sentence? There's nothing worse than looking at houses you have no interest in because the real estate agent has not listened carefully to your needs, or having your home on the market too long because it's priced incorrectly and the wrong buyers are being targeted.

7. Ask the agent what his or her fee structure is. Does he or she require a percentage of the sales price or work for a flat fee? Will the agent be paid another way?

8. If you are unsatisfied with a prospect's plans or personality, thank him or her for taking the time to meet with you and repeat the process with another real estate agent. It can be time-consuming, but it's worthwhile.

Once you've found the right real estate agent to represent you, hold up your end of the relationship. There are simple things you can do to help your real estate agent get you the best deal.

How to work with your real estate agent

1. If you are selling, create an information sheet that lists your home's features and best qualities, especially those that others might overlook. Your agent may be able to use the information when marketing your home.

2. When selling, talk to the real estate agent about cosmetic improvements. Your home may need fresh paint or new carpet.

3. If selling, keep it clean. Eliminate cobwebs and dust. Keep the bathroom counters and mirrors wiped down. Vacuum and sweep daily.

4. If buying, be clear about what you want. Make a list of your priorities numbered 1 through 10. You can always revise the list, but give your agent something concrete so that he or she can research available listings more efficiently.

Food for thought

1. Hiring a REALTOR® will give you a strong advantage. Although many practitioners work part-time, Seasons Realty Associates are full-time professionals who provide their complete attention and expertise.

2. Your real estate agent is an authority you hire to help you make the right decisions, but you have the final word.

3. Your residence is likely to be the biggest single investment you'll ever make. Buy and sell wisely.

4. Office environment can say a lot about a businessperson. Is it clean and organized? Do the office hours make it easily accessible? Are staff members pleasant and helpful?

5. Remember that home values fluctuate with the economy.