Wondering what you can do to save your home from foreclosure? Read Below!
Many homeowners facing foreclosure want to be able to save their home but don’t know how. Getting informed of the six steps of foreclosure is the first part. One mistake can be disastrous. Read more to learn ways to help save your home from foreclosure.
When a borrower falls behind on their mortgage payment many lenders allow them to repay the amount owed in one large lump sum payment, which may include any added-on interest and fees, before a specific date.
- Short Refinance
A short refinance is when a lender may forgive you for a part of your debt and instead refinance the remaining debt into a brand-new loan.
- Special Forbearance
In times of emergency such as a medical hiccup or loss of income a lender can agree to help you with a special forbearance if they believe it is a valid reason for missed payments. Depending on your situation your lender may agree to lower payments or even an interim suspicion of payments. To secure this agreement though you must absolutely be sure to assure your lender that you will be able to pay the agreed-upon rates.
- Mortgage Modification
To qualify for this option you must assure your lender that any monetary problems are temporary. With a loan modification it allows you to refinance your mortgage to more financially doable by either reducing your monthly loan payments or even extending the period of the loan.
- Hard Money Loan
If you are considered a high-risk borrower there is a chance your lender will refuse to refinance your loan. In a case like this contacting a private lender to refinance with a hard money loan can be a solution. These loans usually carry extremely high rates and fees but could allow you the time needed to avoid foreclosure.
These options are great and should be available to most with a government-backed loan and built-in mortgage insurance, such as in an FHA loan.
Other times foreclosure is inevitable. This doesn’t mean there is nothing you can do though! There are many options you have when you have to go through a foreclosure.
Want to know what to do when foreclosure is inevitable? Read below!
- Pre-foreclosure Sale
If there is nothing to do with your current financial situation the only option that may be left is selling your home for less than the amount required to pay the mortgage. You may be eligible for this option but only if you have defaulted by a couple of months or specified by your lender. Sometimes a borrower must also sell by a certain date.
For many homeowners, selling your home is a tough pill to swallow but selling to a friend, family member, colleague, or investor can help. Talking with them to see if they can lease out them home to you is a good option. Having an “option to purchase in the new contract can give you the ability to buy back your home once you can.
- Deed in Place of Foreclosure
When you willingly give your property back to the lender, you can be forgiven for your debt. You will qualify for a deed in lieu of foreclosureonly if you are unable to sell your home before foreclosure. The upside here is you are rescued from a foreclosure and bad credit.
Bankruptcy is talked of as a solution to foreclosure, but, all it can do is slow down the foreclosure process and allow you more time to catch up on payments. Once the suspension caused by filing for bankruptcy is revoked, the lender can ask for a full payment which would mean you would have to refinance a loan. Though due to the bankruptcy leaving you a negative credit score your chances of getting a refinance loan are almost zero.
What This Means
Actively staying clear of common ways of causing foreclosure such as excessive debt, adjustable rate or exotic mortgages, lack of emergency resources, no insurance, and even buying a very costly home will greatly increase your chance of avoiding foreclosure. Researching the best interest rates available is extremely important in helping to choose the right mortgage term that is right for you. Having a 40-year mortgage for example will allow you pay less monthly than a 30-year mortgage, but in general has more interest. Using a tool such as mortgage calculator can help you best accurately estimate your total mortgage payment.
Financial hardships happen and can get in the way of you being able to pay your mortgage on time. Contacting your lender to inform them of your situation is vital. Many times, lenders will cooperate and help you catch up on any missed payments. Foreclosure is a timely and costly effort on everyone part and lenders want to help you avoid it. If you do find yourself in this position, knowing your options will increase the chance to save your home from foreclosure.
It is up to the homeowner though to take the required steps to not enter foreclosure.
Read more about foreclosure and how to avoid foreclosure scams here.
How Do Foreclosure Auctions Work?
When a home is sold at auction it is called a Trustee’s Sale. Sales are handled differently in each area, so you would want to check with your county on its rules and guidelines.
Generally speaking, purchasing the property as-is and proof of financial qualifications are necessary. Sometimes buyers are not allowed to even see the home before the sale. The problem with that is the buyer does not know how much the cost will be for repairs, or if the tenant had previously destroyed the home. There is also the chance you will have to evict the current tenant or owner from the property which is another costly process. After the title transfer, there is also the potential that any negative liens on the property before is now transferred to you.
When buying a home from a Trustee’s Sale you want to make sure you are prepared before. Many individuals professionally buy and flip homes and attend these auctions looking to acquire more property. To avoid problems after a title, transfer some people also may pay in advance for a title search. If you want to buy at a Trustee’s Sale you do not need a real estate agent. It is important to be well informed prior though.
Buying a Foreclosure from the Bank
Banks generally do not sell homes to investors or homebuyers. Instead, they opt to sell their properties for wholesale. If a bank does choose to not sell in bulk but instead to individuals then they commonly use what is known as an REO agent, which is otherwise a real estate agent which specializes in foreclosure.
It is common to buy from a bank in bulk. In bulk sales, the bank puts together a package of properties which they sell in one transaction to one person or group. Buying bulk foreclosures is a good investment opportunity if possible
Dealing with foreclosure in Orlando, fl? Get in touch today to learn how we can help!