Anything that seems too good to be true either is or will be in the near future unless you know ways around it. That holds true for this scenario of a second chance to own a home before losing one to foreclosure.
Last year many people were easily able to buy another home then let their current home go into foreclosure or attempt a short sale. All of these people were current on their mortgage and were able to afford their payments. The thing that bothered them most and the reason they ultimately made the decision to attempt this drastic move was falling home prices. They watched as people around them lost their homes to foreclosure and those foreclosures coming back on the market for sale at hundreds of thousands of dollars less than the home they currently owned and continued to make regular payments on. In essence they were GIVING money to a bank, money they would never see again for a very long time. Not only were they losing money monthly in payments they were also tied to this home for who knew how long. When would their equity recover so they could actually sell their home and simply break even?
The decision to buy a new home before walking away from the other was a financial decision for these people. They sacrificed their good credit in order to buy a home that was in line with the falling values rather than staying in a house so upside down they were looking at potentially 10 years before their equity recovered. It was a financial decision, a business decision, not a moral decision. The guidelines were clearly spelled out in their loan documents. If you stop making your payments we’ll foreclose on your house and trash your credit. They chose this path in hopes of recovering and moving on with their lives instead of being stuck in financial purgatory not of their own making.
Today lending guidelines have changed and for those who waited, the option to buy a new home is no longer available. Today, banks will no longer off set your current home payment with potential rental income of that home. If you have less than 25% equity lenders will not apply rent to offset your current payment. So what options are available? Where there’s a will there a way and now parents and other family members are stepping in to help their own. These relatives are often financially secure with money in the bank and their home is paid off. These family members are now qualifying and buying new homes for their kids and grandkids. A home that is often equal or better than what the kids are currently struggling to afford and at such an affordable price these kids can easily make their new home payment. Since they are dependant on a family members credit they are making wise financial decisions that will not jeopardize their parents credit and they are getting a new lease on life without financial worry.
Last year many people were easily able to buy another home then let their current home go into foreclosure or attempt a short sale. All of these people were current on their mortgage and were able to afford their payments. The thing that bothered them most and the reason they ultimately made the decision to attempt this drastic move was falling home prices. They watched as people around them lost their homes to foreclosure and those foreclosures coming back on the market for sale at hundreds of thousands of dollars less than the home they currently owned and continued to make regular payments on. In essence they were GIVING money to a bank, money they would never see again for a very long time. Not only were they losing money monthly in payments they were also tied to this home for who knew how long. When would their equity recover so they could actually sell their home and simply break even?
The decision to buy a new home before walking away from the other was a financial decision for these people. They sacrificed their good credit in order to buy a home that was in line with the falling values rather than staying in a house so upside down they were looking at potentially 10 years before their equity recovered. It was a financial decision, a business decision, not a moral decision. The guidelines were clearly spelled out in their loan documents. If you stop making your payments we’ll foreclose on your house and trash your credit. They chose this path in hopes of recovering and moving on with their lives instead of being stuck in financial purgatory not of their own making.
Today lending guidelines have changed and for those who waited, the option to buy a new home is no longer available. Today, banks will no longer off set your current home payment with potential rental income of that home. If you have less than 25% equity lenders will not apply rent to offset your current payment. So what options are available? Where there’s a will there a way and now parents and other family members are stepping in to help their own. These relatives are often financially secure with money in the bank and their home is paid off. These family members are now qualifying and buying new homes for their kids and grandkids. A home that is often equal or better than what the kids are currently struggling to afford and at such an affordable price these kids can easily make their new home payment. Since they are dependant on a family members credit they are making wise financial decisions that will not jeopardize their parents credit and they are getting a new lease on life without financial worry.
