How to Prevent Foreclosure
It’s everyone’s worst nightmare — heading toward foreclosure. But don’t feel alone. Countless people undergo the process of foreclosure every year. It’s not a pleasant one, but luckily, it can be avoided. The best thing to do is take charge of the issue immediately.
Barring unusual circumstances, there are three ways to prevent foreclosure: making a deal with your bank, going through the process of bankruptcy, or just selling your house as soon as you can.
Working With Your Bank
You need to communicate with your bank if you’re currently undergoing a foreclosure. Your bank doesn’t want to go through foreclosure either. It’s expensive and time consuming for them. They have to file legal paperwork and actually sell your property.
What they really want to do is get you paying your mortgage. So, if you need to recondition your loan so that your late months are added to the back of your mortgage, they may be willing to do that. This doesn’t change the problem of your mortgage being too much, however.
If you have good credit, you may be able to refinance. Refinancing your mortgage gets you lower monthly payments, especially if you can refinance for a longer term than you had left. (For instance, refinancing a 15-year mortgage to a 30-year mortgage would virtually cut payments in half.) But you do need to have good credit, which many people going into foreclosure do not.
If your mortgage is simply too much, you can ask them to allow a short sale. A short sale sells your property for less than you owe. You can sell the property faster and the loan will be forgiven.
Undergoing bankruptcy is generally a stalling tactic. Once you’re going through bankruptcy, debt collection has to stop. That includes the process of foreclosure. The challenge is that if you weren’t able to pay for your mortgage before, you still might not be able to later.
But if your issue is that you have other debts, you might have a chance. Bankruptcy can wipe out debts like credit cards and personal loans. Once that happens, you might be able to afford your mortgage again. Generally, the house you live in is protected from bankruptcy.
The downside is that bankruptcy will affect your credit score for many years to come. If you don’t really want to keep your house (if it’s too much of a financial albatross), it’s usually better to sell rather than try to retain it through the process of bankruptcy.
Selling Your Property
Of all options, this one is the most straightforward and cost effective. If you can sell your house before the bank can foreclose on it, you don’t undergo the process of foreclosure. Your credit score isn’t hit. In fact, it might even get a lot better because you don’t have that delinquent debt active anymore. And when you sell your house, you can eliminate the rest of your debt with the proceeds, giving you a nice clean slate.
But there are situations in which you don’t feel you can sell. Your house might need major work. It might not be move-in ready. It might be ugly, old, or otherwise in need of repairs or renovations. That’s when you sell to a cash home buyer. Cash home buyers can purchase a property without a mortgage right away, regardless of how much work it needs.
Bottom line: the easiest way to prevent foreclosure is to sell your house fast. If you’re already in foreclosure, it’s likely that you don’t want to or can’t keep the property regardless. If you have a house in the Houston area, contact Terra Home Solutions today to get your cash offer.