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Foreclosure is process by which the lender regains a property because the person who baught the home isn't making the regular mortgage payments. There is a legal time frame from when you first become late on your payments until the Sheriff can actually sell your home. (You should also contact an attorney).
Foreclosure will negatively affect your credit for 7 years or more. If you just walk away from your house and mortgage, you can be held responsible for any amount due after the lender sells your home.
THERE ARE ALTERNATIVES to having your home repossessed and credit destroyed.
Please allow me to educate you about the Foreclosure process!
1. ACT Now!
The biggest mistake is to do nothing until it is to late. Don't give up the fight before foreclosure has even begun! There is nothing more humiliating than a forcable eviction from your home.
Remember that in a foreclosure, the lender adds interest, penalties, legal fees and court cost to the balance you owe. The longer you wait, the more expensive it gets.
2. Keep your emotions in check!
The threat of losing your home is serious. But try to think of it as 'bricks and mortar'. It is better to give up a home you can no longer afford, and to preserve your equity (if there is any left) and credit rating.
3. Don't be a victim of a scam!
Foreclosure records are public. Once your home is in foreclosure, a horde of scam artists will contact you. Their goal is to take away any equity you may have left.
My advice: Never deed your property interest over to a complete stranger in an attempt to stop foreclosure.
4. Try to work out an agreement with your lender!
Lenders do not want to be in the real estate business and would rather have the loan payments current. Lenders are interested in negotiating a payment plan with you.
5. Keep your taxes and insurance current!
If you don't pay your homeowners insurance, the lender will insure the home to protect their interest only. If the house should burn down, the lender is covered, but you loose everything. Pay your taxes or make sure there is money to pay them.
6. Refinance!
You may be able to refinance your mortgage with a mortgage program designed for borrowers with credit problems, but beware of loan predators! Be careful to work with a reputable mortgage broker or lender.
7. Selling your home!
It is often better to try to sell your home to preserve equity (if any) and credit as possible. But don't fall for real estate opportunists who are mostly trying to profit from your troubles. List your home with a reputable Realtor, which your lender would require anyway.
8. Considering bankruptcy!
It is a common miss-conception that your home is protected in a bankruptcy. If your home is in foreclosure, you will be contacted by lots of attorneys promising you an easy solution. It is very important to work with a reputable attorney who will honestly tell you wether a bankruptcy is best for you.
9. If all else fails, walk away gracefully!
There is nothing more humiliating than a homeowner and their personal property being thrown out on the street. If you have exhausted all other alternatives, contact the lender or their attorney and ask if they are willing to pay you to leave the home in an orderly and clean condition. This could help you to secure a rental and pay for a licensed mover.
10. Life after foreclosure!
While it may be difficult to re-establish your credit after a foreclosure, you will be able to buy a car, a home, and get a credit card after a while. Just keep in mind the lender will charge higher fees and interest rates.
Although the possibility of foreclosure is certainly grim for any homeowner, please realize as long as the property hasn't been auctioned on the courthouse steps, something can be done.
Any questions please contact me at 630-835-7003 or george@georgemagdanz.com
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