Going into foreclosure is a stressful time for anyone. But it doesn’t have to be inevitable. There are several tools you can use to avoid going into foreclosure — the most important of which is selling your home before it can be foreclosed on. Here’s what you need to know.
1. Communicate With Your Bank
When you don’t communicate with your bank, they take measures quickly. They don’t know whether you’re still taking care of the property, still living in it, or actively destroying it. It can be distressing to talk to your bank about being late on payments and going into foreclosure, but here is what the bank can do:
- If you have otherwise been good with your payments, the bank may give you some leniency for being late.
- The bank may be able to help you refinance your mortgage for lower payments over a longer period of time.
- The bank may give you a mortgage adjustment to account for a one-time incident of not paying.
Your bank will tell you what they can do to help delay the process of foreclosure. But if you’re simply unable to make your payments, you’ll have to deal with foreclosure one way or another. It all starts with communication. There’s nothing a lender hates more than ignored phone calls.
2. Consider a Short Sale
A short sale is when you sell short of what you owe. You may owe $200,000 on a house and sell it for $150,000. A short sale has to be approved by the bank, and they write off the amount that you sell short, meaning you wouldn’t need to pay the $50,000 (though it would show up as income on your taxes).
Not all banks will do short sales. It’s often better than the process of foreclosure, because foreclosure means they need to pay legal fees, pay for advertising and selling the property, and pay to maintain and repair the property before the sell it.
Of course, if you can sell your house for more than you owe, that’s always ideal. But many people find themselves in foreclosure specifically because their mortgage amount (and their monthly mortgage payments) are higher than they really should be. In this scenario, it’s best to get out.
3. Sell Your House for Cash
When facing foreclosure, it’s almost always best to sell your home as quickly as possible. Here’s why. Selling your home means that you’ll be able to resolve the debt without foreclosure, and foreclosure can follow you for many years. You may not be able to purchase another home for five to seven years afterward, and you may even find it hard to rent.
But if you can sell your house for cash now, you can pay off your other debts and start rebuilding your credit. Home Buyers of Virginia will buy homes in cash without repairs or modifications.
4. Go Through Bankruptcy
Let’s say you don’t want to sell your house. Maybe it’s just not an option. There are other ways you can stop the process of foreclosure; namely, bankruptcy. During bankruptcy, all debt collectors need to stop their actions. That includes your mortgage lender.
Now, filing for bankruptcy is not a permanent solution. But if you can’t pay your mortgage because of other debts, such as credit card debt, it can be a temporary solution. A personal residence is usually protected property during a bankruptcy. While your other assets will get dissolved, you can usually keep your home, your car, and a small amount of personal assets.
When possible, you should work to prevent a foreclosure. The easiest way is to sell your property quickly. If you have a property near Fredericksburg, VA that’s slipping into foreclosure, don’t delay. Call Home Buyers of Virginia for a quote.