What would a foreclosure mean for you? Sell the car? Move back in with mom and dad? Lose your dream home?
We don’t want you to be unprepared in case of job loss, medical emergency or market crashes. Before you own your home in full, you could be at risk for foreclosure. In Missouri, 1 in every 2,226 homes fall into foreclosure (RealtyTrac). This means the borrower is unable to make payments on their mortgage to the lender. After 90 days of missed payments you, the borrower, will receive a Notice of Default (NOD) from your bank lender. From the date on your NOD you have 30 days to settle your payments to current, sell the property, or apply for a loan modification. If none of those actions are taken the bank can schedule an auction for the home within 7 days.
At the first signs of financial trouble it is best to put a plan in place and communicate transparently with your lender. Pushing this problem under the rug will only make it much worse down the road. The first couple options give you the best opportunity to keep your finances in check and avoid legal troubles. Luckily there are many options available to help protect you against a foreclosure.
If your home is worth more than you owe, consider using an agent to sell the property before foreclosure hurts your credit score and ruins future borrowing possibilities. Downsizing the home, selling excess furniture and moving into a different area of town are all ways to get more bang for your buck and avoid foreclosures.
This process allows you to restructure your loan to extend time, reduce payment amount or lower your interest rate. To be eligible you must show you are in financial distress and usually there is a trial period involved to assure you can handle the new payments.
Sometimes we owe more on the home than it’s actually worth. This is when you can use a short sale. Your lender can approve this quick sale with a new buyer, typically the price paid is less than you owe on your mortgage but you’re still avoiding the headaches of foreclosure.
Declaring bankruptcy stops foreclosure immediately since debt collectors can’t continue the collection process. However, this just buys extra time to get your finances in order before the court case. Once you appear in court a settlement will be made between the borrower, you, and the lender, your bank. The bankruptcy trustee’s job is somewhat a mediator between you and the bank to work out a solution to find repayment.
5. Deed in Lieu
A deed in lieu is an option where the homeowner signs the home deed back to the lender and the mortgage is forgiven. In the contract, the homeowner/borrower should work out a grace period to stay in the home until other accommodations have been made, usually around 30 days. This process effects your credit the same way a foreclosure would.
There are plenty of options to avoid being left out in the cold in event of foreclosure. If this threat is looming take action now. Here at Central Development Group we buy homes as-is for cash. We can take the burden off of you. Call us now to find out what your home is worth and what options are available.
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