No one buys a house with the intent of going into foreclosure and losing their home. Life happens and it doesn’t always go as planned. If you have found yourself a victim of circumstance, facing foreclosure, you need to know your options. There are plenty of scammers, waiting for the opportunity to take advantage of desperate homeowners to turn a profit. All too often good, decent people who encounter a life event that makes them fall behind on their mortgage payments either deny that it is happening or over exaggerate the consequences without researching their options. To avoid the knee-jerk reaction of filing for bankruptcy and succumbing to the foreclosure, here are a few things you can do to help prevent losing your home to foreclosure.
Contact Your Lender
It is important to understand that lenders are not bullies looking to take people’s homes. When they put a house into foreclosure status, it is not before they have tried other avenues to recoup their investment first. Lenders took a risk and trusted you to borrow the money needed for your home, in good faith. The title to your home was held as collateral in the event that you faulted on upholding your end of the bargain. No lender will take a hard working person’s home the first time they are late on a payment or if a life event would cause any reasonable person to fall behind. It takes a lot of effort and money for a lender to proceed to the foreclosure process, and many lenders would prefer to avoid it if at all possible.
If you are facing circumstances such as an accident that leaves you unable to work, the death of the primary financial contributor, or divorce it is important to keep the lines of communication open about these major financial strains with your home lender. Notified ahead of time, most lenders will grant leniency if you are late or cannot make the full payment, as long as there is a mutually agreed on plan developed that is honored. Lenders are used to dealing with defaulted loans on a daily basis and can offer the best advice on how to deal with them. But they cannot help if they do not know what is going on.
The lender may allow you to skip a payment one time to help get back on track. They may offer financial advising to help you learn how to deal with your new financial situation and budget your money accordingly. Restructuring payments or refinancing your home loans are also lender options that benefit both you and your lender.
Sell the Property
If all else has failed, before allowing your property to be taken and auctioned off for the payoff balance, you may be able to sell your home. This option should be seen as the next to last resort, with foreclosure being the very last resort. If you owe less than the home is worth and can sell it for more than you owe, not only can you avoid having a foreclosure on your credit history, but you may end up with some money in your pocket.
If you do decide that selling the property is the best option, do not be scammed by “short sale buyers.” There are investors who work with people by buying their homes and then leasing it back to them as a rental property. This option is fantastic, if you can find a reputable investor who will do right by you. But be wary of scammers. According to the United States Department of Housing and Urban Development, the two most common scams homeowners pending foreclosure face are skimming and false counseling.
Skimming is a scam used by fake lenders who will offer to pay off your mortgage for what is owed if you sign the deed over once it is done. Once you move out of the house, the new “lender” will rent out the home, without paying a dime to your lender, until it forecloses and your actual lender forces out the tenants to auction the house off. By the time this occurs, the skimmer will be long gone, both you and the new tenants will be homeless, and you’ll still have a foreclosure on your credit. False counseling is a tactic in which someone may contact you to offer help, for a fee. Once the fee is collected, they will recommend you either sell the home or contact your lender for alternate options, both things you could easily have done on your own.
Contact a Real Estate Professional
Whether you refinance or sell your home, contact a real estate professional such as a realtor or a real estate attorney. Realtors have a firm understanding of buying and selling homes and can offer suggestions on how to keep your home, or can take the headache out of selling your home by doing it for you. A real estate attorney specializes in real estate and can help make sure you don’t get taken advantage of or do something, legally, that you will regret later. Having someone who is knowledgeable on your side can help the outcome sway in your favor and help protect you from being taken advantage of. At Whitecap Realty, we can be the trusted friend you need during this difficult process. Call us for your free consultation and see how we can help you today!