Take time to learn how to stop foreclosure, because having one on your credit can have long-term impacts on your personal and financial life. It can hurt your credit score, leading to higher costs for credit cards, loans, cell phone rates, and insurance. Missed payments and foreclosures can also affect your ability to rent a home or get certain jobs. Many landlords and employers check your credit report.
What We’ve Learned Over the Years on How to Stop Foreclosure
What is Foreclosure?
When you buy a house, you sign various documents. You sign a promissory note, which is your promise to repay the loan. You also sign a deed of trust (in Missouri) or a mortgage (in Kansas), depending on state laws. This deed of trust or mortgage is recorded in the public record. It outlines your obligations, like making payments, property upkeep, and paying taxes. It also specifies what happens if you don’t meet these obligations. Your lender can start foreclosure through a judicial process or a non-judicial process.
Resource: Experian on Foreclosure
Why Foreclosures Happen
Most foreclosures happen because the borrower doesn’t pay their mortgage. Reasons for non-payment can include job loss, high medical bills, divorce, or the death of the main breadwinner.
How Foreclosures Work
If you miss a payment, you won’t get kicked out immediately. The process is slow, giving you time to find a solution. Foreclosure starts with your lender sending you a notice of missed payment. If you’ve missed only one or two payments and can now pay, call your lender. Work out a plan to catch up and stop foreclosure. Acting quickly can prevent extra fees.
Even after foreclosure, you still have time in the house. In judicial states like Kansas, you can have a right of redemption. This allows you to catch up with your lender or sell the house. Even if you can’t save your house, lenders might offer you cash for keys to move out. As a last resort, they would evict you, giving you more time in the house.
Resource: Nolo.com has an outline of how Foreclosures work in Kansas and Missouri
How to Avoid Foreclosure
The best way to avoid foreclosure is to pay your mortgage. Always keep in touch with your lender. The more you work with them, the better your outcome.
Avoid Foreclosure and Stay In Your Home
- Bring Your Mortgage Current: Pay with other money.
- Loan Modification: Talk to your lender. Programs may help you modify your loan, defer missed payments, and make future payments more affordable.
- Forbearance: Some lenders still offer forbearance, allowing you to defer payments.
- Refinance: If you’ve missed only a few payments and your credit is still decent, you may be able to refinance. Lower interest rates or longer loan terms can make payments more affordable.
Avoid Foreclosure but Sell Your Home
- Have Equity: If your home’s value is higher than what you owe, you can sell it. You can sell by owner or list with a real estate agent. Selling will pay off your mortgage, but you will need to move out.
- Have No Equity: If you owe more than your home’s value, a short sale might be an option. Lenders may allow you to sell for less than you owe. Consult your lender, a short sale expert, and a tax advisor.
Short Sales
There are many resources on short sales online. They gained many rules and regulations during the Great Recession. Contact your lender and ask about a short sale. They will provide you with a short sale package explaining their process and rules.
We recommend working with a real estate agent familiar with short sales. They will list your home for sale and market it. Once you have an offer, they will submit it to the lender for approval. This process can be quick or take months.
Resource: HomePath’s Guide to Short Sales
Do Nothing
Doing nothing is not recommended. Ignoring letters from your lender, servicer, and attorneys will lead to foreclosure and eviction. This causes stress, damages your credit, and puts an eviction on your record. It can also result in a large tax bill.
Avoiding Scams
Be cautious of scams when in financial trouble. Many real estate investors, Realtors, lenders, and consumer protection companies are legitimate. However, some may be scams or inexperienced. Before accepting help, research the company or person. Check their reviews, how long they’ve been in business, and references from past clients and industry professionals.
Solution
Want to end your foreclosure worries today? If you need to sell your home, give us a call. We are cash buyers for homes. If you have equity, we may be able to buy your home. We can also talk to your lender to explore your options. If you require a short sale, we have the expertise to guide you through the process.
Visit our How Our Process Works page to learn more. Don’t wait—tell us about your house today and take the first step towards stopping your foreclosure challenges.
