Foreclosure is a looming threat that has affected millions of U.S. homeowners in recent years. For many, all it takes is a few missed payments or a quick economic downturn and all of a sudden you find yourself facing the foreclosure process. Foreclosure can have a huge impact on your ability to borrow money afterward, so you’ll want to do everything you can to avoid it. The first thing to remember is that it’s a process, not something set in stone. Your lender is trying to recover the balance of the mortgage loan they’ve let you borrow, which means that you have options in order to avoid losing your assets completely. If you find yourself facing difficult financial times, here are three tips to avoid foreclosures that you might want to consider.
Contact Your Lender
Your mortgage lender isn’t in the real estate business. They’re not really interested in managing your property and don’t want to have to deal with the expenses involved with reclaiming it from you if they don’t have to. So as scary as it might seem, it can be a good idea to make contact with your lender in order to figure out a way to avoid foreclosure. You might be surprised to find that they want to avoid the process just as much as you do.
If you are going to contact your lender, try to do it quickly. The sooner you talk to them in the process, the more likely they’re going to be to want to work out a deal. The lender might be willing to accept partial payments or even agree to redo the terms of the mortgage.
If the foreclosure process begins, it means your lender is going to come after the full remaining value on the property, and ultimately the property itself if you can’t satisfy the loan. You can halt the process by declaring Chapter 13 bankruptcy, which creates an automatic stay that essentially stops it immediately. The lender can’t proceed until your bankruptcy case is over or the lender receives permission from the court to “lift the stay.” In the meantime, it gives you a chance to organize your finances.
The flip side of declaring Chapter 13 bankruptcy is that it doesn’t provide a total discharge of debt. You’ll still have to repay some, if not all, of the outstanding loans. It also negatively affects your credit score for seven years and could be an impediment to future employment and loans.
Sell to an Investor
If you find yourself in a financial situation that looks like foreclosure is looming and you don’t want to have to deal with bankruptcy impacts, you can sell your home as-is to an investor like Nexus Homebuyers.
They’ll work quickly to come to terms with you and make you a cash offer. You’ll be able to pay off the loan or a large portion of it and walk away from the house without getting into worse financial trouble. It also means you won’t have to worry about racking up further financial penalties or problems with your credit score. And it allows you to begin looking for a new home where you can start fresh.