Foreclosure is a very unfortunate situation in a homeowner’s life. As stated in foreclosure statistics, 1 out of 200 homes faces foreclosure every year. The reason for foreclosures is the financial edge that most homeowners undergo.
What is foreclosure?
In simple terms; Foreclosure is an act of taking ownership of a mortgaged property. The lender or the bank has the right to sell the property for recouping the money and interest respectively.
How does it work?
The Foreclosure process consists of a legal course. The lender takes control of the property by evicting the homeowner, further selling or auctioning the property. Foreclosures generally occur when the borrower (homeowner) fails or stops paying the mortgage payments.
If you are one of them who are seeking help then read the options to consider when facing foreclosure below –
Defend Yourself in Court
Although homeowners are in a melancholy while facing foreclosure, they still have some options accessible to stop foreclosure. The first option is to fight back to the bank. If you think the bank has made an error like sending untimely notices, improper service of notice and loan closing breach of contract, etc. You can defend yourself in the court and countersue the bank for unethically handling the case.
Rent Out the Property
One of the best possible option to stop foreclosure is to rent your property. By renting you are generating a passive income which will possibly cover your monthly mortgage payments. Talk with your lender clearly before moving out. They might charge you with higher interests as you won’t reside there anymore. Also, make sure you offer a mutually feasible rent that would satiate the mortgage payments as well as your personal needs inclusively. Employ your asset and lodge a part of it, it will surely help you in making faster repayments.
Consider Refinancing and Loan Modification
Opting for refinancing will lower your burden of paying heavy installments. If you have ample amount of equity and you’re not much behind the payments then refinancing is the best option. By refinancing you are requesting for a brand new loan with lesser interest rates that help in faster payments.
You can also choose loan modification as per your preference to stop home foreclosure. As similar as it sounds, refinancing it is completely different from it. In loan modification, the lender modifies the prevailing mortgage so that the payments become more affordable. In most cases, the time span is also altered and made feasible.
Consider a Short Sale
Another option to avoid foreclosure is opting for a short sale. What is short sale? A short sale is when a homeowner sells its property for a lesser amount when he or she is on the verge of being financially distressed.
Here, the buyer is a third party; all the profits from the sale go to the bank (lender). If there is still some outstanding debt on the homeowner, the lender will forgive the difference or will file for a deficiency judgment against the homeowner. If the lender files the deficiency judgment then the homeowner is liable to pay the remaining amount within the given time span. Although, your credit score is affected for some years during a short sale, it is better than ending up with a foreclosed property.
If you are considering a short sale then you have nothing to worry. You can contact us here at Elite Properties NY and we will take care of the rest of the proceedings.
Selling a Foreclosed Property
There are multiple ways to stop foreclosure some are effective some are not, it relies on the situation you are in. If you sight foreclosure nearing, you should act fast and sell your home to cash buying companies. Companies like ‘Elite Properties’ buy houses within 3 days in all cash-offer. Once you sell the house to us you receive hard cash, which is always a great deal. Selling home to cash buying companies crafts the deal on the current value of the property. They provide you with certainty concerning the costs and timescale. Furthermore, you can pay your outstanding debt with the help of that money and start afresh.
If you are suffering from any other real estate crisis and need assistance we will be happy to help you in your tough times. Get in touch with us, rest assured we’ll provide you with the best possible solutions.
Homeownership is considered to be the priority goal when it comes to vision slate of Americans. It has been contemplated as a sign of financial stability among the majority of American communities since ages.
This is why, the thought of losing home can be draining, not just financially, but, emotionally as well. If you’re facing a daunting situation where you’re not able to pay the mortgage payment, or you’re already in arrears then, it’s time for you to take the complete charge and identify reliable ways to get out the labyrinth. Otherwise, it may lead to repossession of your home.
What Is Repossession?
Repossession is the stage just before foreclosure. Foreclosure occurs when you fail to pay three consecutive mortgage installments whereas, the process of repossession starts when you miss your first monthly installment. Your mortgage lender would ask you the reason but, allow you to pay the pending installment the next time. In real estate language, this stage is termed as ‘arrears’.
However, if you still lose out the due installment, you won’t be provided with a grace period. The lender will issue a warning letter against you declaring that you can be evicted from the house at any time and the lender would have the right to sell your house. To avoid such a scenario, you’ll have to repay the outstanding mortgage debts immediately. If you cross this stage without taking suitable action, your house falls in the foreclosure category directly.
Here are the best ways to avoid repossession of your home…
Evaluate Your Budget
Understanding the bifurcation of expenditures and income holds extreme importance. Many families follow specific guidelines for their monthly expenses considering the single revenue source.
- Housing – 35% (rent, mortgage, taxes, repairs, insurance, and utilities)
- Transportation – 20% (gas, oil, repairs, insurance, parking, public transportation)
- Debt – 15% (credit card, personal loan, student loan and other debt payments)
- Other Expenses – 20% (groceries, medical bills, prescriptions, clothing, and personal items)
- Savings and Investments – 10% (monthly contributions to retirement, investment portfolios or savings account)
Rendered percentage above are subject to change or are tentative as the needs and family size vary from house to house.
Mortgage Payment Protection
If your emergency funds are not apt to fulfill the payment then, the next step you can take is checking whether you’re entitled to any benefits such as mortgage insurance. Mortgage Payment Protection Insurance (MPPI) is designed to cover the mortgage payments in events such as mishap, sickness or redundancy which are some of the whys and wherefores which eventually halts your income source.
Communicate With Mortgage Lenders
The moment you fail to repay your mortgage installment you ultimately fall into arrears. In such case, the lender will contact you through legal and private mediums that are calls and letters. If you miss subsequent repayment demands, the lender can rightfully start property repossession proceedings against you. It is advised to respond to the calls and repossession notices regularly to evade such circumstances.
As a precautionary measure, you can ask your lender to modify the term or negotiate the mortgage installments to make the repayment more affordable. Also, do not pay any extra fees or monthly charges if you have already made an agreement of repaying arrears.
Rent Your Home
If you have an alternative place than your home to stay, you could move out of your home and rent it to tenants. Consider having a conversation with your lender prior migrating out of the house as they may charge a higher interest rate on the mortgage if you no longer reside there. Make sure the amount you charge as rent to the tenants, should cover the mortgage payment inclusive of the extra costs of being the landlord.
Renting your home or a lodging a part of it would help in increasing your income which aids you in faster repayment of the mortgage.
Sell Your House
Selling property in the market might not assure inevitability, but it might be the only way to stop repossession. If you are not able to keep up with the repayments or due to some financial crisis you should act quickly and sell your house.
There are several companies that make a proposal based on the current value of the property. Such companies have the cash and infrastructure organized to expedite a purchase, giving you certainty concerning price and timescale, ultimately providing you a higher value of the property. Companies like ‘Elite Properties’ buy houses within 3 days in all cash offer.
‘Elite Properties’ is one of the companies that offer you, we buy houses for cash service in New York in your crucial time.
Mentioned above are the tips to avoid repossession of your home that would surely help in your crucial times. Furthermore, you can contact reputed real estate companies in NY like ‘Elite Properties’ for smooth sailing of circumventing the repossession of your home.
Being one of the renowned facilitators of real-estate services in NYC, they assist their customers in every step. Therefore, keep patience, connect with Elite Properties.