Many homeowners across the country, as well as those who own Leesburg homes, have found themselves struggling to make ends meet every month due to a variety of factors (loss of job, change in marital status, illness, etc).  This has left them facing the possibility of foreclosure.  Fortunately, however, all is not lost.  Leesburg homeowners have options.  Listed below are the pros and cons of foreclosure alternatives:

Sell - If you are not underwater in your mortgage (owe less than its worth), you may be able to sell your Leesburg home outright before it is foreclosed upon. 

• Pros: Avoid foreclosure on your credit and keep some of your equity.
• Cons: A large amount of homeowners find themselves owing more on their house than they can list it for.  Selling your home in this case would mean trying to negotiate a short sale with your bank.

Short Sale - Contrary to its name, a short sale can take longer than a traditional home sale.  Your REALTOR® will negotiate with your lender to determine a price they will agree to allow the property to be sold for which is under what you (the borrower) owe them.  Homeowners have to prove that they are experiencing a financial hardship.  What constitutes a financial hardship can vary, so make sure to discuss it with your real estate agent.

• Pros: Won't affect your credit as harshly as a foreclosure would.  You may be able to apply for another Leesburg home loan in as little as two years.  With a foreclosure on your record, you would have to wait about five years before you would qualify.
• Cons: It's a lengthy process that requires a skilled REALTOR® experienced with the short sale process.

Rent - If your monthly payment is comparable to the local rental market, you may want to move out of your Leesburg home and rent it out to cover the mortgage payment.

• Pros: The property is still yours as long as you don't default on your mortgage.  You still get the tax benefits of owning the home as well.
• Cons: Good renters are not always easy to find.

Modification - There are several government programs that will allow you to modify your home loan.  The reason for a loan modification is to lower your interest rate, principal or terms in order to decrease your monthly payment.

• Pros: By decreasing your monthly payment, you are more likely able to afford to stay in your home.  The principal balance on your loan may also end up being reduced, meaning you owe less than before.
• Cons: Homeowners need to be qualified for new payment.  This involves extensive documentation. 

Reinstatement - This can be done when the homeowner asks the lender for the amount that is owed to the bank up to that date and gives the bank the money in full.  This brings your account up to date.

• Pros: You don't have to qualify for any new loan and don't need the mortgage company's approval.
• Cons: You have to be able to pay the entire amount due at that point, including all back payments, interest accrued and late charges.

Other foreclosure alternatives include a forebearance (repayment plan involving making a payment towards back payments as well as the current month's mortgage payment), a deed in lieu of foreclosure (returning the property back to the lender), refinancing, declaring bankruptcy or, if you're a member of the military, the Servicemembers Civil Relief Act.  As a Certified Distressed Property Expert, I can discuss all of the pros and cons of foreclosure alternatives in Northern Virginia and wells as South Carolina with you in person.  Contact me today!

Gene Mock, your Northern Virginia and South Carolina real estate specialist