Foreclosure is a long and difficult process for homeowners. With the floods that happened earlier this year in Houston, analysts are predicting a significant spike in the number of houses being foreclosed in 2018.
If your home is damaged or you are facing financial hardships as a result of the hurricane, you are not alone. Here’s what you need to know about your options in lieu of foreclosure.
A mortgage lender can initiate the foreclosure process if you’re behind on your payments. Officially, it begins once you’re given a notice of default after your fourth missed payment. Keep in mind that the lender’s goal is to recover their collateral, not take your house from you. Lenders prefer to work with homeowners on refinancing rather than foreclosure. Even for them, foreclosures are time-consuming and logistically complex that they’d rather avoid.
If the value of your home is greater than the amount owed on the loan, you can avoid foreclosure by selling the home, paying off the loan, and keeping the extra money. Unfortunately the devastation caused by the floods robbed many Houston homeowners of their equity.
Nobody wants to have their home taken away from them. That being said, remember it is your home until the day it gets sold at auction or possessed by the bank. Weigh your options and decide on your best plan of action. Most importantly: get started right away.
Negotiate with your lender
There’s no hiding from your lender. Be upfront about your situation. Your lender may be your most powerful ally when it comes to negotiating a deal to keep your house. Ask about restructuring your monthly payments to incorporate missed payments into a new schedule paid over time. Or, you might be able to negotiate a reduced interest rate.
It’s possible to get your payments reduced or suspended temporarily if you talk to your lender about forbearance. Houston homeowners are realizing that the cost of fixing their flood-damaged homes exceeds what they’re able to get from insurance.
In response to the hardships caused by recent storms, government agencies called for a three-month suspension of foreclosure sales, late fees, and delinquencies reported to the credit bureau. This gives lenders and borrowers some space to work out forbearance plans. If you need more time to sort out your financial challenges, consider taking advantage of assistance programs. Your mortgage lender can explain your relief options. You may be able to delay payments for up to a year.
Deciding to sell your home, no matter how distressed, may be your best bet. Selling as-is can seem counterintuitive if you’re new to the home selling process. Most homebuyers, you figure, are looking for their dream home. It can be hard to imagine anyone wanting to buy a flood-damaged home in need of major repairs but they’re out there.
It’s important to note that your lender doesn’t have to stop the foreclosure process while you’re trying to sell. Although foreclosures can last months, or a year, time is not on your side.
You can sell the home yourself, or with an agent. Either way, you’ll want to get started right immediately. This can seem a daunting task considering the goal of getting enough from the sale to settle the score with your lender. You must also figure in any delinquent payments, penalty fees, as well as agent costs, if you choose to hire one.
A real estate agent will help you determine the value of your home based on market factors, including Houston’s major devastation. They’ll suggest a price, and give you an estimate of how much you can anticipate receiving from a successful home sale. Another benefit to hiring an agent is their competency in negotiating with lenders on your behalf. In some cases, they may be able to talk down the amount demanded of a short sale in order to save the property from foreclosure.
Not everyone has equity in the property they own, especially when unexpected things happen. If the value of your home is less than what you owe on your mortgage, your home is considered underwater.
If this is the case, selling your home requires permission from your lender to do a short sale. Obviously, selling your home and letting the bank take the money isn’t what you had in mind when you decided to buy the home. If it’s any concession, a short sale will spare you from the huge hit to your credit score as a result of foreclosure, not to mention the long-term consequences of declaring bankruptcy.
Find and save money
Finding ways to raise money in little ways can add up in big ways if you’re creative. What can you liquidate? If you’re already selling your house you might as well sell everything in it. Utilize online marketplace channels like eBay, craigslist and OfferUp to sell salvageable furniture, items in your closet, jewelry, the car and more.
Seek help from friends, family and your community. Be clear about your intentions if you’re seeking a loan. Suggest a repayment plan that you can stick with and put it in writing.
Acquiring money is hard work, especially under pressure. It’s also disheartening when everything you earn must go straight into paying debt to avoid foreclosure. Finding little ways to save can keep you motivated. Review your current budget and open your mind to finding a weekend job or cutting back on frivolous expenses.
If your Houston home was damaged by the hurricane or floods, we’re here to help. You can avoid foreclosure in Houston when you know your options. Contact us to discuss a cash offer on your Houston home. We buy homes as-is!