The one term that a homeowner never wants to hear – foreclosure. It is the end of homeownership for many, and a strong learning lesson for others. But what exactly is foreclosure, and how can someone, such as yourself, avoid it?
What is Foreclosure?
Before we delve any further into how you can avoid foreclosure, it is imperative that you understand exactly what foreclosure is. If you own your home and you are making payments to a lender, then you are at risk of foreclosure. Foreclosure is the legal process by which an owner forfeits all rights to their property because they have an outstanding debt that they cannot pay. Generally, a homeowner will be provided a Notice of Default once they have missed three payments. Then the lender will start the process of foreclosure – that is, the lender will either auction the home or take possession of the home.
How To Avoid Foreclosure: Start with Financial Planning
If you already own a home or are thinking about purchasing a home in 2019, create a financial plan either on your own or with a professional. This is the first step in the homeowning process to ensure that you do not end up with a foreclosed home. You can prioritize your spending habits so that you do not miss mortgage payments. Place healthcare and your home first, then see what additional entertainment you can afford to add. If you have already missed payments on your home, this is a good way to try to get ahead. Review how you are spending your income and identify where you can make cuts. You can even delay payments on “unsecured” debt while you get caught up on your mortgage payments.
If You Have Already Missed a Payment….
Understand Your Rights
One of the biggest mistake’s homeowners can make is to panic when they receive a Notice of Default. In a previous post we outlined the process of foreclosure – reviewing the steps and having an in-depth understanding of the process can provide stress relief during this worrying time.
Review Your Assets
Do you own a second car, a boat, or jewelry? Selling assets that are unnecessary can help you make payments on your mortgage. Remember, the bank does not want to take your home, so finding cash and negotiating can help improve your position with the lender.
Do Not Ignore the Problem
Skipping payments and ignoring notices from your lender generally leads to increased financial strain and possibly homelessness. It is a careless response to this type of financial crisis and claiming ignorance has no benefits for you. Therefore, if you have missed your payments and you are receiving notices from your lender, the first action you can take is to contact them. Many lenders are willing to work with you and may help you create a plan so that you can avoid foreclosure.
Avoid All Foreclosure Prevention Companies
Although in the depth of your worry you may see some hope that these companies may bring, they actually just cause a greater financial burden. Most of these companies are for-profit and do not have your best interest in mind. They charge heavy fees and cannot guarantee that your home will be saved. Instead, put the money that you are considering spending on a foreclosure prevention company towards your mortgage. Again, this shows your good faith to the lender.
Consider a Short Sale
Until your home goes to auction, you still have the possibility of finding a buyer and presenting the offer to the bank. The offer does not have to be equivalent to what you owe, but should be competitive compared to the fair market value. When the lender forecloses on a home, they are now going to seek their own buyer; therefore, if you are able to bring a buyer to the table before the home goes to auction, you will be saving your lender time and energy on finding a buyer, and you will be avoiding foreclosure all together. In the end, this can help you save your credit and provide a better foundation for when you are seeking another mortgage.
Where to Find A Buyer for Your Property?
Finding a buyer who can provide an aggressive offer can be challenging. However, all cash buyers can be just the buyer you are looking for. Lenders are drawn towards their offers because they offer a quick and simple solution. All cash buyers, such as ourselves, can offer high bids and a quick close. Therefore, if you are looking for a buyer for your home, contact us today and learn how we can help you avoid foreclosure.