Foreclosure is a difficult process for any homeowner. Proceedings start once a person has not made either payments or acceptable arrangements for payments for over 90 days. In California, it is estimated that nearly 12 out of every 100 properties is in some stage of foreclosure. There is, however, a way to stop the process.
When a bank begins foreclosing on a property, they are looking to re-coup their original loan by assuming the value of the property and then selling it again. This is a lengthy process a bank would much rather avoid. It would much rather agree to a sale, even at a loss of the original loan amount. A cash home buyer can likely complete a transaction with the homeowner that will stop the bank from moving ahead.
The ideal scenario for selling a house takes place when a homeowner decides he or she will make a tidy profit and it is time to move on. The vast majority of sales work this way. A small percentage, however, are caught in foreclosure, where payments are unable to be met and the bank seizes the property.
The fastest way for a property to avoid foreclosure is through a sale to a cash buyer. The amount of the sale can then be used to pay off the loan and penalties. Even if you owe more than the house is worth, a bank will be much more willing to negotiate in good faith at this point and accept far less to avoid getting the house back; this is known as a short sale and is very effective in a depreciating market.
The State of California uses a system of nonjudicial foreclosures, meaning that no court order is required to begin proceedings. The Notice of Default is filed with the county courthouse and delivered to the homeowner at the same time. This invariably speeds the process along, giving a distressed property owner less time to either raise money or work out an agreeable arrangement with the bank. When homeowners manage to stop a foreclosure proceeding in the state of California, they are also protecting their credit rating. Should they wish to return to the housing market, other lending agencies will not see the black mark of foreclosure on their credit reports? Otherwise, it can take seven years for a foreclosure to disappear from a person's credit history.
There are companies that are able to complete quick transactions for sellers that are either simply tired of their property being listed with no sale or facing foreclosure. The offer price will be lower than a seller would like, but if they are facing a foreclosure process, the long term savings to credit and reputation can be incalculable.
Copyright Property Partners, LLC 2007
Especially during the holidays, retailers offer no interest, no payment plans as a way for you to purchase that must have stereo system, dining room set, or recreational vehicle without having to put money down. For those who do not have enough cash on hand, this seems like an ideal way to get what they want now and pay for it down the road when their finances are in better shape.
What many people do not realize is that these plans are often times not the perfect solutions they initial seem to be. Depending on the terms of the contract and whether or not you are able to make your payments when they come due, these types of agreements may result in you having to pay significantly more than you anticipated and can wreck havoc on your credit rating.
To start with, even the most financially responsible consumer can see their credit score drop because they took advantage of a no interest, no payment sale. This is because in many cases you are opening a new line of credit with the retailer that, depending on if and how it is reported to the credit bureaus, may increase your credit utilization ratio.
Your credit utilization ratio is a sizable portion of the formulas used to calculate your credit score. It is the amount you owe divided by the amount of credit that has been extended to you. Experts suggest you keep your utilization ratio at or below 30. The line of credit for your deferred payment plan, however, has a utilization ratio of 100 because the amount of credit extended to you is the same as the amount you owe. Depending on your other credit accounts, this could drastically increase your overall utilization ratio and consequently lower your credit score.
Aside from impacting your credit utilization ratio, no interest, no payment plans can include unexpected stipulations in the fine print that catch consumers unprepared. For example, even though retailers may offer zero interest for the first year, it does not necessarily mean you are completely off the hook. Retailers sometimes begin calculating interest starting the day you signed the contract instead of at the end of the non-payment period. When receiving their first bill, consumers are met with the realization that they are responsible for the repayment of 12 additional months of interest fees in addition to the purchase price.
On top of this, consumers who are unable to make payments on time face the possibility of serious credit problems. Late payments can be reported to the credit bureaus and under the terms of your contract, may result in the interest rate on the amount you owe skyrocketing. In addition, even with plans where no interest was accumulated during the no-payment period, if you make even a single late payment, all of that interest may now be added to the amount you owe. What started out as a convenient way to make a purchase, may now involve high monthly payments, collections agencies, and a rapidly declining credit score.
If you are considering taking advantage of a no interest, no payment plan, make sure you understand all aspects of the agreement and read through the contract carefully. Know what interest rates you will be charged, whether or not you will be charged interest during the no-payment period, and what the penalties are for late payments. Only after having all the details will you be able to tell if a deferred payment plan is best for you.
Both Marcel Ford & Stuart Hunter are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Marcel Ford has sinced written about articles on various topics from Real Estate, Property Sale and Finances. For several informative articles ranging from mortgage issues to tips on selling your house visit