Home prices are on the rise throughout Atlanta. This surge in cost is causing economic uncertainty for many homeowners and bringing to the forefront the question of foreclosure.
Even though the situation may sound ominous, there are ways to avoid foreclosure and losing your home.
Check out a few of these expert tips to get started.
If foreclosure is on the horizon, contact your lender immediately. In most cases, lenders don’t want to start the foreclosure process any more than you do.
When a lender gives a mortgage to a borrower, they expect it to be repaid. Lenders have the potential to lose money during a foreclosure, so it is in their best interest to try and work out an agreement. In some cases, a homeowner can end up with an agreement that allows them to pay back less than the original terms, but this is not a guarantee.
At the very least, when you contact your lender after you’ve become late on payments, you’re showing them that:
The effort can go a long way toward getting your lender on your side. If your lender believes that you are looking to take the steps to remedy the situation, they will be more willing to stall foreclosure and give you time to improve your finances.
Once you contact your lender, you could also ask about a potential loan refinance, which means redrawing the loan terms. Your lender will forgive the current loan balance, meaning you’ll take out a new loan with different terms.
Refinancing your loan could help you stay in your home and continue to pay the same lender with a more manageable mortgage rate. That said, refinancing your loan is usually only possible if you have a strong credit score and a good history with your lender.
If you can’t refinance with your current lender, see if another lender, bank, or credit union will be willing to refinance your loan. In that case, the other lender will pay off your current mortgage in exchange for taking out a new mortgage loan with them.
Your lender provides you with essential communications or messages via traditional mail, and responding to this mail is key.
It’s essential to keep up to date with these communications so you’re aware of important information, including foreclosure deadlines, payments you may have missed, and so on. You won’t be able to stop the foreclosure of your property if you aren’t aware of these crucial details.
A deed in lieu of foreclosure is an offer made by a homeowner to their mortgage lender — you’ll offer the deed to your home instead of losing it during foreclosure.
If the lender accepts, the lender will be free to sell your property for a profit or at a minimal loss. You’ll have to leave the home, but you won’t wind up with a foreclosure on your credit record. The trade is worth considering, as foreclosures stay on your credit for seven years, and this black mark on your report can make it difficult to purchase another home.
That said, a deed in lieu of foreclosure is often only possible if you are on good terms with your lender and the property is in good condition. A lender will only accept a deed in lieu of foreclosure if they believe they can sell the property shortly after taking possession of the deed. Their goal is to make money, and if a deed in lieu of foreclosure won’t help them achieve that goal, they probably won’t accept it.
Filing for bankruptcy can be used as a financial tool to try and delay foreclosure proceedings. If you retain a lawyer and file for bankruptcy before a foreclosure sale, you may be able to prevent a foreclosure from showing up on your record.
It is important to note that although bankruptcy may defer the foreclosure, it does not fully solve the problem. Having an active or recent bankruptcy on your record can hinder your chances of working with a mortgage company or investor. It is important to know that depending on the chapter and discharge or dismissal status, it can take a couple of years to qualify for a mortgage or loan product again. This method is not recommended since the effects are temporary and can lead to an even more dire situation in the future.
That said, it’s best to speak with a legal expert before deciding whether filing for bankruptcy is a wise strategy to avoid foreclosure.
If a homeowner is able to find a willing buyer, they can try to participate in a short sale.
In a short sale, a willing buyer pays less than the remaining mortgage amount. However, they’ll pay enough money that your bank or lender will accept the sale in exchange for releasing you from debt obligations.
This option is easiest if you know someone in the real estate industry willing to purchase your home quickly for as much of the mortgage amount as possible.
If the above options don't fit your goals, contact Balance about participating in an equity investment agreement.
Balance will pay off your mortgage and replace it with an equity investment, and you'll make a streamlined payment to us that includes your occupancy of the home and your share of the home’s expenses, such as insurance and taxes.
Our equity investment allows us to share in the appreciation of your home, while you get to stay in your home with low costs. As co-owners of the property, we’ll pay our share of the monthly expenses, such as insurance, taxes, and HOA fees. Unlike some of the other possible options, Balance will not impact your options for future lending or add any red flags to your credit report.
You can also buy us out of our equity at any time and be the sole owner of the property. It’s an effective strategy that many homeowners have used to avoid foreclosure.
While there are many ways to avoid the foreclosure of your Atlanta home, one of the best is to contact Balance. When you do, we’ll review your information, decide on a potential co-ownership, and make an offer if we believe it’s a good investment. In exchange, you’ll stay in your home and have a simplified monthly payment. It’s that easy.
With our help, you can stabilize your finances, rebuild your credit, and start the path toward buying us out and claiming sole ownership. Contact us today to learn more.
Sources:
Foreclosure: Definition, Process, Downside, and Ways To Avoid | Investopedia
Refinance: What It Is, How It Works, Types, and Example | Investopedia
What is a deed-in-lieu of foreclosure? | Consumer Financial Protection Bureau
