Short answer is, if you still have at least a few days left before your auction date, it's not too late to stop foreclosure. The lasts from 6 months to over a year, but a lot depends on your state's laws. As long as your auction has not concluded, it's wise to keep trying different ways.
However, saving your home is not just about staying put; it's about maintaining your financial credibility. Ideally, if you could figure out the way out to pay dues, the nightmare ends here. Missing payments and reaching the stage of foreclosure have already affected your credit, but the worst comes after foreclosure. In this article we will explore foreclosure stoppers and their eligibility criteria's.
Let’s look into ways of stopping the foreclosure.
Short answer is, if you still have at least a few days left before your auction date, it's not too late to stop foreclosure. The foreclosure process typically lasts from 6 months to over a year, but a lot depends on your state's laws. As long as your auction has not concluded, it's wise to keep trying different ways.
However, saving your home is not just about staying put; it's about maintaining your financial credibility. Ideally, if you could figure out a way to pay the dues, the nightmare ends here.
Reaching the stage of foreclosure has already affected your credit, but the worst comes after foreclosure. We're not trying to scare you but help you see the reality better. In this article, we will explore foreclosure stoppers and their eligibility criteria.
Before diving into ways of stopping foreclosure, let’s clarify the no-go options that people usually waste time on.
This involves replacing your current loan with a new one that has better terms and interest rates after settling your old loan. However, refinancing is nearly impossible once you’ve missed payments. In order to qualify for a refinance you must have 12 consecutive on time payments and a high credit score.
Home equity loans require significant equity and a good credit score, making them hard to qualify for if you're already behind on payments. This option is often not viable in foreclosure situations, as not only those who have missed a payment not qualify, these loans are in 2nd position and require a much higher credit score than even a typical first mortgage loan refinance.
Foreclosure is a tricky situation, but it's definitely avoidable. Start exploring your options as soon as possible and identify what can work for you. This will help you save your home equity and keep control of the situation. Common options to explore include foreclosure assistance, such as loans to stop foreclosure, government help, and legal avenues like bankruptcy. Find a solution that works for your situation.
Paying off the due balance along with attorney fees is the most straightforward way to stop foreclosure. However, this option requires a significant amount of money upfront. To qualify for this option, you need:
Now, let's talk about Loan Modification. This option involves negotiating with your lender to modify your existing mortgage with one that has a deferred balance and / or more affordable monthly payments. To qualify for a loan modification, you need:
Employment and Income Stability: You should have a steady job and income that can support the modified payment plan. Typically, lenders want to see that no more than 45% of your monthly earnings goes towards your housing payment. You can quickly divide your monthly mortgage payment including your taxes and insurance. If the number is more than 45% it will be unlikely for you to qualify.
Proof of Hardship: Demonstrate a genuine financial hardship that has impacted your ability to make payments, such as job loss, medical expenses, or other significant issues. Its important to share with the lender not only how this affected you, but what the future now looks like for you.
Qualification Based on Current Income: Your current income must be sufficient to meet the new loan terms. If your income has declined significantly, this option might not be viable.
Remember, short refinance can come with tax implications, so consult your financial advisor beforehand. If successful, this can make your mortgage more affordable and help you avoid foreclosure.
Mortgage Forbearance
Mortgage forbearance allows you to ask for a temporary pause or reduction in your mortgage payments. To qualify, you must demonstrate a true hardship and the ability to repay after the forbearance period expires. Your lender will likely require proof of your current income and financial situation. It's important to discuss qualifications upfront to avoid wasting time. Remember, this is a delay, not an elimination of your mortgage.
While bankruptcy should be a last resort, it can provide a temporary reprieve from foreclosure. By filing for bankruptcy, you can halt the foreclosure process and work on a plan to repay your debts. It's essential to consult with a foreclosure attorney to understand how bankruptcy can affect your specific situation and explore all available options.
Filing for bankruptcy under Chapter 7 can buy you time to negotiate with your lender, although it won't stop foreclosure. Chapter 13 bankruptcy is a better option for homeowners wanting to stay in their homes, as it may allow you to catch up on payments and remove junior mortgages.
Filing for bankruptcy under Chapter 13 is often a strategic move to stop foreclosure. Chapter 13 allows homeowners to reorganize their debts and create a repayment plan that lasts three to five years. This can include catching up on missed mortgage payments, thus preventing foreclosure. By filing Chapter 13, you can retain your home while addressing other outstanding debts.
Again, we would repeat: losing your home is not the biggest fear—losing your financial credibility to build your life for a minimum of seven years is what you should really be afraid of. If you are not able to prevent foreclosure through other means, it simply means that you will lose the home. However, there are still ways to avoid losing your home equity.
If you cannot do any of the above, consider tapping into your home equity, provided you are not underwater—meaning you don’t owe more than your home is worth. Home Equity Loans should only be considered if you have enough time to go through the process and are sure you can qualify and repay them. However, this option is typically for those with better credit scores due to the risk for the lender.
The bottom line for the above advice is: try your options as soon as possible and be smart about figuring out what can work and what cannot. Spending too much time on these options and shooting in the dark simply means you are losing home equity and time, which could save you from further financial damage.
If you find yourself unable to make your mortgage payments and none of the foreclosure prevention options work, selling your home might be the best way to avoid foreclosure and protect your financial future. Here are your options to available in market -
Traditional sale is usually not a good option in distressed situations as finding and hiring the right real estate agent and getting it sold could take several months. Finding decent price in this situation is tricky, and almost impossible. This process can be lengthy and costly with fees collected by realtors, title companies, and sometimes the seller contributing to the buyer's lender to help with their rate. If you take this route, keep your lender informed.
In a short sale, your lender agrees to accept less than the full amount owed on your mortgage. This sale happens when a homeowner can’t keep up with their mortgage payments and needs to sell their property, but the mortgage balance is more than the property’s current value. It’s called a short sale because the sale proceeds fall short of covering the outstanding mortgage balance. This usually occurs when property values are dropping, or you may have purchased your home in the last few years. Again, a short sale takes about 4-6 months to complete from the time an offer is accepted, but it can take even longer in some cases.
A deed in lieu of foreclosure involves voluntarily transferring ownership of your home to the lender in exchange for the cancellation of your mortgage debt. This option can be less damaging to your credit score than a foreclosure and allows you to walk away from the property without the foreclosure stigma but you lose all you hard-earned investment and home equity.
The residential sale leaseback process allows you to access your home's equity without disrupting your life. Programs like the Unlock and Stay program enable you to sell your home, take out the equity, and immediately rent the property back. This gives you time to figure out your next move, stop foreclosure before losing your financial credibility, and eliminate HOA and property tax burdens, along with any repairs or maintenance the home may need .
If you have made up your mind and want to sell the home, our Lock and Move program, offers a quick cash sale with benefits like a fast close, no agent or title fees to the seller, no need for appraisals or home inspections, and avoiding the hassle of months of showing your home. It also reduces the risk of the buyer falling through, providing a more straightforward and quicker resolution.
At District Phoenix, our Unlock and Stay program and Lock and Move program offer immediate relief to people struggling with mortgage payments. Even if you are days away from foreclosure, we can negotiate with your lender to delay the process. With Unlock and Stay, you can stay in your home, rebuild your credit, and avoid moving costs, appraisal fees, realtor commissions, and additional repair costs. If you are facing foreclosure or already going through one, connect with the District PHX for better options and advice.