Foreclosure is a scary thing, and when it’s on the verge of happening to you, it can feel like you aren’t prepared at all. As the economy continues to be impacted by the pandemic, foreclosure looms as a very real threat to many homeowners. At Myers Home Buyers, we’re dedicated to helping people facing foreclosure, from providing you with in-depth information that will expand your knowledge on the foreclosure process, to helping you avoid foreclosure altogether. But before all of that, you need to know what exactly foreclosure is.
What Is Foreclosure?
When you are purchasing expensive property, it is unlikely that you will be paying the entire cost of the house up front. So instead, you can pay some of the price with a down payment, leaving you to borrow the rest of the money to be repaid in the years to come. This is where a lender comes in. A lender will give you a hefty loan, and as part of the load agreement, you will agree that the property that you are buying will serve as collateral for the loan. If you stop making payments, the lender legally has the right to take possession of that collateral by way of a “Lien”, which is a legal claim or a right against property.
What Is the Process If I’m Facing Foreclosure?
The foreclosure process is a slow one. Not only is it slow, but it can be extremely costly to both parties, especially the lender, so lenders typically only move for foreclosure as a last resort once they have lost hope of ever being paid.
Missing a couple of payments on your property probably will not have you facing eviction, but it is important to communicate with your lender about the reasoning behind those missed payments. Be honest and let them know if you have fallen on hard times. It could go a long way. Regardless, it is important to have the steps of foreclosure in the back of your mind so you know what could be coming:
1. You Will Begin Receiving Notices:
Typically, once you’ve missed three consecutive mortgage payments, lenders will consider your loan in default. Through the lender’s communications, they will likely begin warning you of their intent to move forward with foreclosure.
2. Judicial and Non-Judicial Foreclosure Filings:
If you live in a state with judicial foreclosure, around day 90 of delinquency, lenders may file a lawsuit so that they may obtain a court order to sell the property. In a non-judicial state, things move much more quickly, as there is no judge involved. The lender can foreclose based on the agreements you both have signed and move swiftly along in seizing the property.
3. The Final Foreclosure Notice:
If you have not met your payment deadline (usually after 120 days), the homeowner will be sent a notice of foreclosure stating exactly when the homeowner must vacate the property, though during this time, the homeowner is still allowed to make the payments if they are able to.
4. The Auction:
The foreclosed home will become available for public sale where the highest bidder can buy it. If no one places a bid, the lender can buy the property and sell it in a private sale at a later date.
All hope is not lost! There are certainly a few things that you can do during this stressful period. You do not have to simply let your home foreclose and then end up out on the street. You have options and it is important to know them.
This option is often overlooked, but the bank will want to see if they can strike a negotiation with you. Why? Because they don’t want to foreclose on your home and would much rather reach some other equitable agreement. Not only do they not want to have to do this to a person or family, they don’t want to lose out on a significant amount of money and have to sell a house that they don’t want to sell. So, once it’s time to negotiate, the bank may try to make a few adjustments for you. They may give you a new loan with a lower interest rate or they may even be willing to waive all of the late fees and payments that you have if you can get back on the right path.
Another pre-foreclosure option is using private money lenders. These lenders will work with you on a new loan if you are facing foreclosure. As long as they believe they can get a good return on their investment, they will consider any sort of deal that is on the table. The loans that they provide aren’t quite ideal, but it could be the best option in a desperate situation. It’s at least worth a discussion with them.
If My Home Is in Foreclosure, Can I Sell It?
Of course you can! You can sell your home during foreclosure all the way up until it is officially sold at an auction, which leads us to our next topic:
How Can I Avoid Foreclosure?
One way to avoid foreclosure is to sell your home. As we previously stated, if your home is in foreclosure, you can still sell it. When it comes to selling any home, you have more than one option.
1. Traditional Home Sale
You can hire a real estate agent to help you navigate this quick turn-around. But when it’s crunch time, hiring a real estate agent might not be the best solution. A real estate agent will have to run a market analyses and price the property; advertise the listing; negotiate with potential buyers; and finally, work with the lender to ensure that the loan is approved and funds are available at the time of closing. These things all take time, and usually more time than you have if you’re facing foreclosure. Also, potential buyers are likely to expect a home in prime showing condition, so expensive updates are often required and buyers are likely to negotiate costly repairs. In addition, the traditional home sale process is expensive. Realtors typically charge 6% of the home’s sale price as commission, plus the seller incurs closing costs on top of that.
2. Sell for Cash
A quicker solution and more hassle-free solution could be to sell your home for cash. Cash home buyers buy houses “as-is,” in any condition. So, no expensive repairs are required. Since it’s a cash sale, there’s no waiting on a lender for approval of funds, which typically takes 30+ days.
When it comes to “we buy homes for cash” companies, you have choices. You can take an offer from a single investor and hope you’re getting a fair price. Or, if you want to ensure you’re getting top dollar for your property, call Myers Home Buyers.
We’ll give you a free consultation and help you decide of a cash sale makes sense for you. You pick a closing date that works for you, and we take care of the rest. In no time you’ll have competing cash offers from our extensive network of verified investors. You pick the best one and that’s it! You’re done. No showings, no repairs, no inspections and no hassles.
In many cases a cash home sale is the perfect solution for avoiding foreclosure and we’ve helped many homeowners do just that. There are some cases where selling for cash is not the best, and if this is the case in your situation, we’ll advise you as to what your best course of action is.
So, whether you choose to sell your home to us or not, we’re here to help and provide you with the information you need to make the best decision possible. We know that life can give you lemons, and what happens is not always within your control. But we are problem solvers, and we’re here to help you find solutions.