A letter to homeowners going through Foreclosure
A homeowners guide to the 4 options during foreclosure and you might be able to keep your house
First off, foreclosure is a terrible thing to have to go through. It’s a heart-wrenching time and for that I am truly sorry. The goal of the list below is to mention some of the options you have and maybe give you some hope. There is light at the end of the tunnel.
I have listed out the options but give my recommendations at the very end in case you want to skip down to that part.
There are 2 main kinds of foreclosure:
- Mortgage Foreclosure – Payments to the bank were not being made so the bank begins to repossess the house.
- Tax Foreclosure – The government did not receive its tax payments and as the saying goes, “The only 2 sure things in life are death and taxes.”
This article will deal with the mortgage foreclosure but I will write about the tax foreclosure in the next article.
If you have already received your bank’s “Notice of Foreclosure” or “Notice to Foreclose” then unfortunately, if nothing is done the bank will repossess the house and sell it at the county auction. There is a way to stay in the house but some solutions will require you to move but not necessarily empty handed.
Truth is, banks don’t want to foreclose. They would rather you stay in your house and they get their money but under the current arrangement they are not getting what they need for the deal to remain.
4 Possible Options to Stop Mortgage Foreclosure
- Loan Modification (allows you to keep the house): They key is your equity. Call the bank and specifically ask for a “Loan Modification.” The quick definition is that you are requesting the bank to look at the terms of the original mortgage and rework the terms so you can possibly be forgiven for missing the payments due to a financial hardship or setback and seeing if they can work out a deal with you. They want you to stay in the house so as long as it’s a win-win for you and for the bank then you get to keep your house! This should always be the first option you do.
- You never know what a bank will do so be bold in asking them what they can do for you. Coming to a mutual agreement is the absolute best for both parties if you want to stay in the home.
- List It (will have to move): This solution depends on how long you have before the bank actually does the auctioning off of the property. The county auction is always held on the 1st Tuesday of every money. If you have at least 2 months before the foreclosure deadline, then consider listing the house with a Realtor on HAR.com. You will need to sell the house for the amount left to pay on the mortgage and anything above that first goes to your closing costs and secondly, to your pocket. This will make the highest return on the house but it requires time so make sure you have time.
- If you want to go this route, I only charge 1% to list a house as opposed to the usual 3%. In my opinion this is definitely worth doing since it allows you to possibly cash in on your equity.
- Sell for Cash (will have to move): If you are in a time crunch before the foreclosure deadline then you can sell the house for a cash offer. The offer needs to be enough to pay off the mortgage and then depending on your equity, the rest of the cash goes to you. This solves the foreclosure problem instantly, and saves your consumer reputation aka credit. Selling for cash is a very easy and quick way to sell the house and stop the foreclosure. No repairs are needed and no official inspections are done. If a survey is needed the buyer will pay for it and almost always covers the closing costs. Anyone in a time crunch should consider a cash offer. The only thing that isn’t covered is usually any taxes owed for the year and the commission if YOU have a realtor. The cash buyer does NOT get any commission.
- Usually a cash offer is about 70% of the current market value of the house. I give cash offers to buy houses as-is and I close in 2 weeks. I cover all closing costs and don’t charge a commission. It’s a super easy process so I always suggest for homeowners to get an offer just to see what one would be. Getting an offer doesn’t mean you accepted it so you aren’t committed to anything.
- Short Sale (will have to move): A short sale is when the bank is willing to have the house sold and they accept a lesser amount than what is owed on the house in order for the bank to not go through the entire foreclosure process. This is rare and will require legal counsel.
- I’m not a lawyer and cannot give legal counsel but I wanted to let you know the option exists.
In order to play poker you need to have all the cards. So follow these recommendations and you will have them. Here is how I would go about handling the foreclosure.
- Call the bank and ask about the loan modification.
- Call a Realtor to find out what they think the house could be sold for and how long it would take.
- Call a cash buyer and get an offer.
Once you have the info for all 3 of those items then make a game plan. I’m a Realtor and a cash buyer so I can do both 2 and 3 in the same sitting.Click to get your offer
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