If you are among one of the over 1.4 million homeowners facing this foreclosure, there may be a creative technique to save your home and salvage your equity. The last thing that you want to do is give your home back to the lender. Foreclosures are a growing dilemma for many homeowners in the United States today and are at an all-time high.
An Option To Foreclosure
On the bright side of things, you may have an option that may allow you to keep your home, even if the foreclosure process is already underway. Something that has been around for many years, and you may utilize to save your home and equity. You may need to wait a year or two to cash out the equity on the property, but it can be better than the alternative.
This option is referred to as a Lease Purchase Agreement, find a tenant to lease your home from you, with an option to purchase the home at the end to the agreed period of time; usually 12 to 24 months. You set a price for them to buy the house when the agreement is signed; this will allow you to set the price so you can save the equity and by some time to recover. With a tenant that has the option to buy your home you may be able to:
1) First and foremost is the avoidance of a foreclosure
2) Since renters are paying less today due to the high foreclosure rates, this may be a way to increase the monthly rent, due in light of the purchase agreement
3) A one-time payment, up-front as a non-refundable deposit, this is usually 1% – 3% of the sales price. The best part of this is that even if they decide not to buy your home, you still keep the money
4) Quickly locate a buyer for your property, most times faster than trying to sell you home in the traditional manner
5) Someone else will be paying the mortgage payment, and potentially a few hundred dollars a month more
Lease-Purchase Agreements can work well under the right conditions of the real estate market; these agreements referred to as a “lease option” as well. This is a very valuable strategy to keep in mind, especially during a market in distress.
While there may be many other reasons to take advantage of a lease option, they are defiantly an excellent way to avoid foreclosure and salvage your home from the bank. In a foreclosure, your credit will be destroyed for years to come, and the additional financial repercussions can take a toll on your personal life.
As we know every situation is different from real estate, it’s best to explore all your possible options before coming to a decision!