Find Out The Good And Bad When It Comes To A Reinstatement Or A Payoff
Foreclosure is a very difficult period for current homeowners and it is a costly legal exercise for both the lender and the borrower alike. If you as a homeowner are not able to make payments in a timely manner, lenders will try to recoup their loss by selling the home.
Reinstatement and payoff are two options that people have that can stop foreclosure. Here we will discuss the differences between the two and the different options for each one.
What is Reinstatement?
Reinstatement happens when the home owner pays the full portion of his debt, and thus allows his mortgage loan to become current. He is not paying for the entirety of the loan itself, but only the necessary missed payments and its affiliated fees to allow his mortgage payment plan to be back on track.
In order to stop foreclosure on the home, the homeowner must pay off his debt before a sale occurs. Often the last day will be 5pm the day before the sale is set to take place, but it is extremely important to not wait until the last minute. After all, missing this important deadline means the loss of your property, and you do not want home loss to actually be the result of a late courier delivery or a processing error.
How to Start a Reinstatement?
To start a reinstatement process you will need to first know how much money you owe on the debt. You can find this out by contacting the lender and asking for a reinstatement letter. This is sometimes called a reinstatement quote but it will show you the exact amount of money that you owe on the house in order to get it caught up. This will not only include the missed payments but it can include things like foreclosure processing fees, attorney fees, and the current payments due on the property.
You will need to pay this in full as soon as possible and it will need to be in the form of check, cashier's check, or some other cash equivalent. You are best served by either making the payment in person or by using a speedy shipping option that will include the tracking number that will follow the process.
What is a Payoff?
A payoff is done when borrower pays for the full amount of the loan itself, stopping the foreclosure because the entirety of the loan is fulfilled. This means that a homeowner does not just pay back the outstanding debt balance that led to his delinquency, but he also pays for the full portion of the mortgage at the same time. This type of payment also includes all the processing fees incurred during foreclosure procedure. The only real difference between a payoff and a reinstatement is that the payment that stops foreclosure fulfills the loan itself instead of bringing it up to date.
How to Start a Payoff?
A payoff is more difficult for the homeowner because they are paying off the entire loan and not just a portion of it. The process starts in a very similar way as a reinstatement. To start it you must get in touch with the lender to get a payoff letter. Please take note that the quote will be higher then the loan balance because it will also include interest, foreclosure fees, and any other charges that may have been incurred. The quote will also list the approved payment methods as well as any applicable due dates. Most of the time a loan is fulfilled by refinancing the house with another lender.
Most lenders are not interested in a fast home sale because it will usually result in less money to them. Most of the time lenders will be willing to work on other options with the borrower. In cases like this reinstatement and payoffs are good for all parties involved.
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