How to Prevent Foreclosure
It’s not your fault. Foreclosure can happen to anyone, especially during difficult economic times. But when a foreclosure is imminent, it’s in your best interest to do everything you can to avoid it. The bank will use all the tricks in their arsenal, so you should too.
Step One: Contact Your Bank
It’s easy to avoid talking to your bank when you’re going into foreclosure, but your bank can actually be your best friend. Most banks don’t want to foreclose on someone, because it’s expensive. They don’t want to be responsible for a property. They definitely don’t want to have to sell it. Contact your bank and ask them what they can do for you. They may be able to put you on a payment plan, let you sell short, or refinance your loan for lower payments.
After you’ve talked to your bank, you’re going to need to take the next step of either selling your house or trying to keep your house.
Option One: Sell Your House
The faster you can sell your house, the better. If you can sell your house before the foreclosure, you can pay your bank off before it ever hits your credit score or becomes a legal issue.
There are a few things that could stop you from selling your house:
- It’s not worth as much as you owe. This is when you need to ask your bank for a short sale. A short sale sells “short” of the amount you need for your loan, but you’re forgiven the difference and don’t have to pay it back.
- It cannot be sold conventionally. If your house needs major work, another company isn’t going to lend a mortgage on it. You’re going to need to sell the property in cash.
- It has some form of entanglement. One such entanglement might be a lease. If you’re trying to sell a property with tenants in it, it’s going to be an uphill battle.
Most of these issues can be solved by going through a company that specializes in purchasing houses in cash. These companies are able to give you immediate payment for the fair market value of your home.
Option Two: Keeping Your House
The most straightforward way to keep your house during a foreclosure is to declare bankruptcy. Bankruptcy will dissolve your other debts but will likely let you keep your house as long as it is your primary residence. You will need to reaffirm your mortgage and mortgage payments, but without your other debts, it may be feasible.
The downside to this is, of course, that if you can’t pay for your house now, you may not be able to pay for it in the future. If your house payments are simply more expensive than they should be, you should strongly consider selling your house instead. Otherwise, you could end up in the same situation a year down the road, and an inability to declare bankruptcy again.
Other than bankruptcy, you may be able to “re-age” your account. This essentially takes the payments that you missed and puts them on the back of your loan. If you want your mortgage servicer to let you do this, you’ll need to have a compelling reason regarding why you were late with your payments and why that won’t happen again.
You can also attempt to refinance your loan for a longer term, such as refinancing a loan that only has 15 years left as a 30 year loan instead.
If you’re heading toward foreclosure, We Buy Houses Oklahoma City can help. By having us purchase your home now and in cash, you can avoid costly penalties, legal fees, and damage to your credit score. Contact us at We Buy Houses Oklahoma City today to find out more.