What Is A Mortgage Orphan and What To Do If You Are One?
An orphan mortgage is a title given to a mortgage that is up for renewal, and one the present lender has no concern in renewing. When you’re in this situation it might be as a result of poor payment history on behalf of the borrower, or perhaps the lender’s criteria have changed, and this particular mortgage no longer meets new lending criteria.
The second situation is especially crushing for the borrower, who may be forced to sell their property. The lender has already endeavored to sell this mortgage to a new lender with no success, so the weight of the situation is on the borrower to remedy the situation. Unfortunately, there may be no easy solution.
What To Do When You’re Mortgage Orphaned
Find a new lender. Preferably you can be qualified with a new lender who agrees that you meet their qualifications. Get out there now! Get on your best outfit and show that you mean business and any mishaps that might have happened are now over. Get confident, and you never know if you qualify if you don’t ask and leaving a good first impression is everything here.
Rent to own. If not then rent to personal or private sale scenario might be the route to go. a rent-to-own agreement, in which you rent a home for a certain amount of time, with the option to buy it before the lease expires. Rent-to-own contracts consist of two parts: a standard lease agreement and an opportunity to buy.
In a rent-to-own agreement, the buyer, pays the seller a one-time, typically nonrefundable, upfront fee referred to as an option fee, option money or option consideration. This fee is what allows you the choice to buy the house by some date in the future. The option fee is often debatable, as there’s no standard rate. Still, the cost regularly ranges between 2.5% and 7% of the purchase price. In some contracts, all or some of the option money can be allotted to the final purchase price at closing.
The worst case scenario is to walk away from your home. You don’t want that type of disparaging mark on your credit report if you plan to contemplate home ownership in the near future.
This Is Your Moment
Don’t let this moment push you down. Own up to whatever mistakes you might have made and then take the necessary steps to move forward. Make requests of friends or family, whatever you need to do. Soon you’ll be able to look back at this challenge and see how it made you grow. Diamonds form under pressure, and this is just moving you closer to that diamond inside you. Know that you’re not the first to go through this and that you never have to be alone.