Facing Foreclosure? How to Slow Down the Process
When homeowners struggle to meet their monthly payments, this triggers fears of foreclosure. Communicating with the lender and asking for a temporary break from payments or finding out what other options are available to you is your best first step. However, in certain situations, it may be impossible to stave off foreclosure.
Going into foreclosure can be very scary but there are steps you can take to slow down the process and prevent losing your home and still owing the lender money.
What is foreclosure?
If you are unable to pay your mortgage, it means that the lender has the right to take your home. Foreclosure is when a lender goes to court and puts the right to take your house into practice.
Once they have foreclosed, they often put the house up for a quick sale and if the sale does not cover what you owe, they can still pursue you for the balance. Foreclosure proceedings will only start if you are in arrears for over 90 days so you have some time to take certain steps.
Many initial notices of late payment from the lender will include information about foreclosure prevention options. States differ in how to handle foreclosure and knowing the procedure in your state will help you to figure out how much time you have to find a solution.
Sell your home quickly
If you’re at risk of losing your house, selling quickly provides you with a way to end up with cash in hand. Very Fast Home Buyers in Houston, Texas, will sell your home in “as is” condition, which means no need for expensive repairs, no commissions to pay to realtors and a quick cash offer. As they buy your house cash, there is no need for banks, appraisals or inspections.
Communicate with the lender
Neglecting to communicate with the lender is one of the biggest mistakes you can make. Most lenders would prefer to work out a solution with you than taking the route of foreclosure, which is both time-consuming and costly.
Talk to the lender about options that could lower the amount you need to pay every month, such as extending your mortgage term. Refinancing is where the lender offers you a new loan, including your missed payments and what you owe.
The benefit of this is that it could help to lower your monthly payments and does not reflect negatively on your credit. A repayment plan and forbearance are other options.
Consider filing for bankruptcy
Filing for bankruptcy has a negative effect on your credit but it can help to delay foreclosure. There are two types of bankruptcy and the moment you file for bankruptcy, this imposes an automatic ‘stay’ on your assets. The type you file for depends on your income.
A Chapter Seven bankruptcy wipes out your debt and a court-appointed trustee sells off your non-exempt property to pay your creditors.
With a Chapter 13 bankruptcy, you keep all your property but have to pay back all or some portion of your debt through a repayment plan. Either type gives you time to figure out how to move forward with your home.
Think about a short sale
If you don’t see yourself to be able to repay your mortgage despite the various options available to you, a short sale may be an option. With a short sale, the lender agrees to settle for less than the home is worth. You will lose your home but you will not have a foreclosure or its repercussions on your record.