The thought of moving from a home that you’ve invested in for years seems unbearable. You’re exhausted and you’ve run out of resources to make the mortgage payments. Sometimes moving on is the best solution.
The truth is, there is no easy step-by-step instruction for knowing when it’s time to foreclose. But the signs are there. And the voice in your head is telling you, the condition isn’t going to get better or it can’t be fixed. It’s time to let go even though, there are still a few uncertainties. The first step is to be honest with yourself. Acknowledge that staying won’t change or even improve the situation. Accept that moving may actually improve the situation.
Unexpected life changes may force a foreclosure
Unexpected life changes or events you have no control over happen contribute to foreclosure. For some the loss of a job can affect finances and the ability to pay bills. Others have major family issues that make mortgage payments impossible to manage. As difficult as it sounds, there’s a light at the end of the tunnel.
Here some warnings signs that it’s time to foreclose:
- Living off of credit cards for day to day expenses
- Difficulty in paying home mortgage
- Bills are paid late with minimum amounts
- Financial accounts have been depleted
There are options for managing foreclosure, especially for homeowners in early default. It’s critical to consider the advantages and disadvantages to determine what works best for your situation.
No matter what the age is of the property, lenders can help. One consideration is restructuring the monthly payment for a specific amount of time. It gives the homeowners some wiggle room to bring the loan current. Refinancing the loan depends on the balance and length of term for adjusting the payments.
- Talk with the lender
- Be honest about the situation
The more the lender knows about the circumstances helps in making a good decision for keeping or letting the home go into forecloser. If all else fails there is deed in lieu of foreclosure. This is a transfer of ownership to the foreclosing lender to stop foreclosure proceedings.
Sell the property
In some cases, the property may have equity to cover the loan. A sufficient amount allows the lender to work with the homeowner in selling the home. Selling pre-foreclosure can help to keep negative information off of your credit report.
Letting the loan default several months can be costly with late fees and a loss of points against your credit. Selling isn’t always the first choice, but it can be a better choice. Selling to pay off the loan gives you an option of walking away with less damage your credit history.
- Consider a short sale
- You lose the equity
Just be sure to meet with a real estate attorney before relinquishing the property. Read the agreement and understand any liabilities or obligations in the agreement. Some investors actually allow the homeowner to remain in the property during the sale.It gives the owner some time to vacate before the transaction is complete.
No matter what you decide, it’s important to make this decision early in the process. Speak with the lender before final foreclosure actions are taken. If the bank or lender is unable to work with you, there are realtors or investors willing to take a property in good condition to sell quickly.
Keep the following two points in mind:
- There are solutions to avoid impacts of foreclosure
- Short sales can offer positive opportunities