Home ownership, the American Dream or the American Nightmare? The popular belief is that home ownership is the American Dream and just about everyone works their hardest to purchase a place they can call their own, my self-included. Owning your own home brings a sense of pride and stability in your family.
It is a beautiful dream to own your home but many of us get so excited about our new home that we often buy or build a home that is too much for us to keep our heads above water turning our dream into a nightmare. I often come across clients who live beyond their means making it difficult to stay current with their mortgages and end up in foreclosure court.
The first question that comes up when troubled homeowners have money problems is, can I stop my foreclosure? The good news is that banks do not want to foreclose on any homeowner because loans in default look bad in their investment portfolio and use foreclosure as a last resort. Most homeowners in foreclosure are embarrassed about their situation and ride their troubles in seclusion hoping for some sort of miracle when in fact, we must be doing the opposite and get some help. Most importantly, your must know your options and speak out about your situation.
Home Foreclosures Definition
What is foreclosure?
Foreclosure is a process used by a lender attempting to recover the balance of a loan from a borrower who has stopped making payments by enforcing the sale of the asset used as the collateral for the loan, our case the home. It a scary thought thinking the bank can force the sale of your home and truth be told they can force this sell anytime during the foreclosure process. But don’t be alarmed because there is hope.
The Foreclosure Process
The foreclosure process is usually carried out over a three to six-month period, in other words it does not happen immediately and there is some time for you to act. After three to six months of missed payments and notices of delinquency to the homeowner the bank forces the sale of the asset in an auction sale. The length of time varies by state, but the process does begin when you miss your first payment, therefore it is critical to seek help immediately if you start to fall behind on your mortgage payments.
Stopping Foreclosure Sale
Do not panic because you do have options to stop the foreclosure sale. Your options range from modifying your loan to making a quick sale so you can at least save your credit and get a fresh start in life.
The first option you should consider is talking to your bank about your situation to see if they will grant you a loan modification. Note, that banks are not obligated to grant you a modification. In this case, you do need to build your case and prove to the bank your hardship and that a modification will help you stay current without falling back into the same situation. It is important that you speak out at this moment because no one will advocate more for you than your own self. Be wary of third party companies who claim to take care of this process for you because they normally ask for hefty fees.
Selling Subject-To the Existing Mortgage
If your bank will not grant you a loan modification your next options will be to make a quick sale of your home, so you can at least save your credit and begin to rebuild. The simplest way to sell your home is through “We Buy Houses” investors. You have probably seen these yard signs across town claiming to buy houses for cash. One of the creative ways they can buy your house to save you from foreclosure is by buying your home subject-to the existing loan. The investor will bring your loan payments current and continue making payments helping you avoid foreclosure, but you will have to transfer ownership of the house to them. Depending on how much equity you have in your home meaning the difference between what you owe and what the home’s current value is and if you are working with a respectable investor you may be able to get some money out of your home. If you know you will not be able to continue making payments on your home loan it is crucial you seek help from one of these investors immediately because this process does take a few days to stop the foreclosure process. If the foreclosure sale is in the next couple of days, you may already be too late.
Most “We Buy Houses” investors advertise that they buy houses cash. This is another investments strategy they use but to be able to do this you must have plenty of equity in your home because the investor must calculate their transaction costs in the purchase. For this strategy to work you typical must have been in your home for over ten years to have paid your loan balance down sufficiently. It is not uncommon to get offers to buy your house for cash around fifty-five percent of the value of your home. Again, this is because the investor must account for the expenses she must incur when making their investment. It is not an ideal scenario, but it will save you from foreclosure.
The short-sale strategy is the longest process used by investors and they will only work in certain situations. A short sale is ideal when you owe more on your home loan than what the house’s value is at the current time. For example, if you owe one-hundred and fifty thousand dollars on your loan but the house is only worth one-hundred and twenty-five thousand dollars this may convince the bank to allow you to sell the property for at a loss before the foreclosure sale. Keep in mind that the bank is not obligated to let you sale the property at a loss, it is a longer process than those mentioned before, and it is most ideal in an economic downturn.
Things to Consider
These are good option to sell your house quickly, but you must be very careful when dealing with these investors because many of them have their own interests in mind. If you are in the foreclosure process at this moment and have been denied a loan modification or refinance through your bank you can get a FREE, no-obligation consultation from one of our home buying specialists. The difference between us and other We Buy Houses investors is that we are here for your best interest. Our programs will not work for everyone, but we care about you winning in life by either buying your home or learning to master money, so it does not happen again.
Save Your Home – Tips to Avoid Foreclosure
Regardless of your situation and the stage you are in the foreclosure process there are a few things you must keep in mind throughout this ordeal:
There is nothing worse than overthinking the situations. The subconscious mind is very powerful and if you beat yourself up about what went wrong you will begin on a downward spiral. Keep in mind that there is a way out and you will live to see another winning day.
Be your own advocate
There is no one else out there who will fight harder for you than your own self. Speak out and seek help. Whether you are granted a load modification or sell your home, stay on top of the entire process. Your future depends on it.
Do sweep the situation under the rug
Do not sweep the situation under a rug and hope that things will work themselves out. The time to take act is now.
Know your options
The most important tip to know is to know your options because there are options. It is not the end of the world. No matter how difficult things seem to be there is always a second chance.
I am an advocate of continuing education. In this sort of situation, the banks can take your possessions but they cannot take what you have learned. Educate yourself. My mentor John C. Maxwell says, “sometimes you win, sometimes you learn”. Right now, it is time to learn.
Focus on the now
Do not worry about what is going to happen when you lose your house in a foreclosure auction. You may be worrying about things that will not actually happen. Focus on what is happening right now at this very moment and let’s take action.
There is hardly anything that is more important than following-up. Remember that you are your own advocate, and no one will work harder for your success than You.
Home ownership is a beautiful concept and it is the American Dream if approached, correctly. Live within your means and buy a home you can afford and that will be give you sustainable living and a piece of mind. Here is another quote I absolutely treasure by Dave Ramsey, “Live like no one else so that later you can live and give like no one else.” Live within your means, earn your financial freedom and then you can upgrade.