What is foreclosure? What are your options as a homeowner. How do i avoid foreclosure? What is pre-foreclosure? What happens at a foreclosure auction?
These are all questions that may be filling the minds of those facing the sometimes overwhelming burden of foreclosure.
This topic is something no homeowner wishes to be knowledgeable in however is you or someone you know is facing the foreclosure process this is the right place to start. Education is key to knowing you options as a homeowner and taking the steps to avoid foreclosure. KVBuyHouses provides free education to those looking to save their homes. We also provide a means of “getting out” for those simply looking to salvage their financial situation and start a new chapter in life.
Foreclosure is a legal process carried out by mortgage lenders When a homeowner doesn't pay his or her mortgage for an extended period, the bank or entity that lent that money takes possession of the home—which means the current owner must move out. Also often known as loan default.
The foreclosure process can be extremely scary for homeowners. Especially if the foreclosure is directly connected to an traumatic event such as; the loss of a loved one, employment change, or serious injury. but it's not all that common today: According to Attom Data Solutions, the foreclosure rate (meaning the percentage of loans in foreclosure/default, scheduled for auction, or bank repossessions) is currently an estimated 362,275 U.S. properties with foreclosure filings in the first six months of 2018, down 15 percent from the same period a year ago and down 78 percent from a peak of 1,654,634 in the first six months of 2010. During economic downturns, like the housing crisis of 2011, foreclosure rates rose as high as 3.6%.
If you're struggling to make your mortgage payments, you'll want to know what foreclosure means and how it works.
KVBuyHouses is dedicated to providing homeowners with the information needed to make the appropriate decisions. Here's what you need to know.
1. What is pre-foreclosure?
The simple truth is if you’re a few days late on a mortgage payment, there’s no need to panic—the bank isn’t going to set your belonging out and confiscate your home. In fact, most mortgage contracts have a 15-day grace period, with a late fee of 5% on payments made thereafter, check your mortgage documents to see if this applies to you..
The real problems start when you’re more than 90 days late on your mortgage payments. At this point the bank will issue a “Notice of Default” with the County Recorder's Office. You should receive a letter in the mail notifying you that you’ve defaulted on your loan. Typically home owners have 90 days to pay your most recent bill. If you reach this stage your home is technically in pre-foreclosure which means the banks have not taken control of it yet and the great news is you still have time to figure out your next move.
If your house is in pre-foreclosure, your best move is to contact your lender to see if you can work out a repayment plan and avoid foreclosure. Most banks would prefer you keep your home and continue to make your mortgage payments. After all, this is how they make their money. But as we all know, somethings life happens! The sooner you take action the better chance you have at working out a deal and saving yourself lots of time and mental pain. Don't bury your head in the sand and stop opening the mail. I promise you’re the out of sight out of mind appoarch will not work here. Contact your bank right away, and they may be able to find a way to work with you. If you are sure where to start seeking guidance, KVBuyHouses can help.
One way to possibly save your home while in pre-foreclosure is through a mortgage reinstatement. A “reinstate” of your mortgage can be done by by making up all the missed payments at once, plus interest and lender fees. You'll then go back to paying your monthly bill as usual. If you can’t come up with the money, your lender will start the foreclosure process.
2. What is foreclosure?
As a homeowner you have to think hard on your next steps. Luckily, while the paperwork is slowly making its way from desk to desk, you don’t have to move out, however when the process is complete, you’ll receive a notice to vacate. (Most states, you have between five and 30 days to leave. Check your state and locality eviction law.) You’ll also receive a “Notice of Sale,” which states that the property will be sold at auction, and it lists the date, time, and location of the auction. Your lender is required, by law, to publish this Notice of Sale in a newspaper in the county where your home is located for three consecutive weeks before the auction date. At this point you may feel overly stressed and worried but there is still hope. You still have the option to reinstate your mortgage up until five days before the auction. For those capable of gathering that amount, you will stop the current process and go back to making your monthly payments.
3. What happens at a foreclosure auction?
This is not storage wars, however, your home will be sold at a public auction to the highest bidder, who must pay the full amount for the purchase immediately. This buyer will receive a trustee's deed once the sale is complete, at which point he or she becomes the official owner. But foreclosure auctions don’t always go as planned.
Unlike traditional home sales, where the seller uses comparable properties (“comps”) to determine and negotiate the sales price, a different formula is used by mortgage lenders to determine the listing price of a foreclosure. The starting bid usually includes the balance of the unpaid mortgage loan, interest owed, attorney's fees, and costs generated by the foreclosure process—and together, those costs can sometimes push the asking price well above the home’s market value.
If no one buys the home at auction, the lender becomes the owner and the home is considered a bank-owned or REO (real estate owned) property. Typically, the lender will then work with a real estate broker to put the property on the market. REO properties are generally sold "as is,". This means the lender is selling the home in its current condition and will make no repairs or improvements (or give the buyer any credits to fund fix-its).
If you have reached this point please reach out to a professional to see what additional offers may be available to you!
4. What happens after foreclosure?
The life altering effects of foreclosure doesn’t simply stop after auction. If you undergo a foreclosure, it goes on your credit report and can drop your credit score by as much as 300 points, or possibly more. This can hurt your ability to obtain a new mortgage, credit card, auto loan, rental leases, or even a cell phone plan. A foreclosure remains on your credit report for up to seven years, but its impact to on your credit score will often lessen over time. Those facing foreclosure due to extreme changes in income, health issues, etc, often carry more than one negative marks on their credit at this point. There are also steps you can take to mend your credit score: Pay your credit card bills on time, spend within your means, and don’t take on new unnecessary debt.
In short, foreclosure may be stressful, but there is plenty you can do to prevent it from happening—and repair the damage if it happens to you. You just have to
TAKE ACTION
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