PLEASE READ PRADA PROPERTIES ALTERNATIVES TO AVOID FORCLOSURE.
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Option 1: How does a balloon mortgage work?
Answer:
A balloon mortgage is a short-term, fixed rate home loan with fixed monthly payments for a set number of years (usually 5-10) followed by a final payment of the principal.
Payments are usually lower with a balloon mortgage because only the interest is paid each month. For example, borrowing $10,000 in a balloon mortgage means that a large payment is due in one lump sum at the end of the term.
Note: You will have to make final payment or refinance the amount, by the due date of you baloloon payment.
Answer:
The reason for the "balloon" payment is due to a difference between the repayment term (time until maturity) of loan and the actual payment amortization (repayment plan).
With regular financing, 30-year mortgages will have a 30-year amortization (repayment plan) and a 15-year mortgage will have a 15-year amortization. With ballooon finanicng, the loan is frequently due (term) in 15 years, but the payment amortization is for a 30-year repayment. Consequently, at the maturity of the loan in 15-years the debt will not have been repaid, resulting in the last payment being significantly higher.
The benefit for this type of financing is that the borrowers have a low monthly payment. The downside is that the loan usually must be refinanced before the last payment is due.
Option 2: Real Estate Note Transfer (Salvage your credit make a profit)
Typically homeowners who are behind on payments, in foreclosure or have no equity in the home are the most common types of motivated sellers. Even though these types of motivated sellers are in financial distress they can benefit from this transaction. They will benefit because the buyers will be making their payments on time so it will help their credit. Prada Properties Highly recomends this option to the seller our commitment to our clients is to negotiate a contract where the seller makes a proffit regardless of the sellers equity in the property or balance owed to the lender. Our network of Real Estate Profesionals have been very sucessful through out the years in making these transactions in a reasonable timely maner and that has been both benificial to the seller as well as the buyer.
Option 3: Loan Modification
A loan modification is exactly what it sounds like: the lender agrees to change the terms of your loan so that you can continue to pay your mortgage and hold title to your property. The loan is changed to fit your new financial situation and is designed to be a long-term, permanent solution. There are several different ways that a loan modification can be structured:
Option 4: Short Sale
A short sale transaction involves a lender taking less money than is owed on a property when the property is sold. For example, if Bob owns a property on which he owes $135,000 and the bank agrees to let Bob sell that property to Joanne for $100,000, leaving a $35,000 deficiency, then that is a short sale. Historically in short sales, the owner doing the short sale was not allowed to receive any money from the transaction. However, these days many lenders are actually offering incentives to sellers for doing short sales in an effort to avoid the costs of foreclosure. These tend to be called “relocation packages” or “relocation assistance,” and are designed to help the former homeowner successfully vacate the property and move on with their life. You should be aware that successfully completing a short sale does not necessarily mean you are in the clear as far as your delinquent payments go. Holders of secondary liens may still pursue you for satisfaction of those liens, and many lenders sell of the deficiencies on short sales to third parties who may, in some states, obtain deficiency judgments on these overhanging debts and attempt to collect as far as ten years in the future.
Option5:Settle Up
We know that settling up is not an option for everyone. However, if you are delinquent on your mortgage and facing foreclosure but your situation has changed and you are now in a position to begin making payments again, talk to your lender to see if there is a way to work the situation out. Remember to carefully document all communications and save copies of everything. Working out a payment process for a delinquent loan can be complicated and time consuming, so be ready to be patient or contact PRADA Properties and get results on time.
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