If you are behind on your mortgage, you might be thinking about what to do to avoid the foreclosure of your Atlanta house.
We can help with these tips!
Negotiate With The Bank
When you have missed a few payments your first step might be to call your lender and discuss your available options.
After all, they want to see the return on their investment, they don’t benefit when you default on your loan.
Often times you will be able to negotiate a repayment plan to get caught up on what you own.
Before you pack your bags and sneak out in the middle of the night, call your lender, you might be surprised at what they will do to work with you.
A short sale occurs when the lender agrees to sell the house for less than what is currently owed on it.
This happens if a home is purchased at a high price, only to lose value over time.
If the owner gets behind on payments, they might find themselves in a place where they owe more than the home is worth.
Lenders will often agree to a short sale when they see this as a means of recouping most of their costs, while not having to deal with the foreclosure process.
When a sale amount is agreed upon with the lender and a buyer comes through, the mortgage lender will consider the loan paid in full.
Ways To Avoid The Foreclosure
The best way to stop a foreclosure in California, for example, is to prevent the filing of a Notice of Default.
We mention this state because 35 million people live in California and California is the land of real estate religion.
Lenders do not want to foreclose but will file a Notice of Default to protect their interests, if necessary.
If you know you are unlikely to meet your mortgage obligation, the first thing you should do is call your lender.
Don’t put it off, be embarrassed or ignore letters from your lender because those responses will make the situation worse, not better.
Depending on your particular situation and hardship circumstances, here are some loan modification options your lender might propose to you:
- Time to make up your payments: Lenders might agree to wait before taking legal action against you and let you work out a repayment plan that is affordable for you. This is called forbearance.
- Forgiving a payment: If you can agree on a way that you will be current after missing a payment or two (without the means to pay it back), the lender might give you a break and waive your obligation. This is called debt forgiveness, and it rarely happens.
- Spread out the missed payments over a longer term: For example, if your payment is, say, $1,200 a month, the lender might let you add $100 a month to each payment for a year until you are caught up. This is called a repayment plan.
- Changing the terms of your loan: If your mortgage is an adjustable loan, the lender might freeze the interest rate before it increases or changes the interest rate to a more manageable rate for you. A lender might also extend the amortization period. This is called a note modification.
- Add the back payments to your loan balance: If you have sufficient equity and meet the lender’s lending guidelines, the lender might increase your loan balance to include the back payments and re-amortize the loan. This is called a refinance.
- Make a separate loan to you: Certain government loans contain provisions that let borrowers who meet specific criteria apply for another loan, which will pay back the missed payments. This is called a partial claim.
Options After a Notice of Default
When the lender files a Notice of Default, your options are limited.
That is why it is better for you to call your lender before falling behind on your payments because lenders are often reluctant to work out repayment schedules after foreclosure proceedings have been commenced.
You will be given a certain time period to bring the payments current, pay the costs of filing the foreclosure, and stop the foreclosure.
This is called reinstatement of your loan.
If you cannot make up the missed payments and the lender will not work with you, here are a few other options to stop foreclosure:
- Sell your home: Interview real estate agents to get an opinion of market value and average DOM to sell your home. You might be tempted to hire a discount broker, but many sellers feel they need the exposure and marketing that full-service brokers offer. Compare both to determine which best meets your needs and time frame.
- Consider a short sale: If your home is worth less than the amount you owe, you might be a candidate for a short sale. A short sale affects credit but it’s not as bad as a foreclosure. You or your agent will need to negotiate with your lender to find out if the lender will cooperate on a short sale. This is called a pre-foreclosure redeemed.
- Sign a Deed-in-Lieu of Foreclosure: This is called deeding the home back to the lender. The homeowner gives the lender a properly prepared and notarized deed, and the lender forgives the mortgage, effectively canceling the foreclosure action. Lenders tell me that deeds-in-lieu of foreclosure affect credit the same as a foreclosure.
- Short term rental: The lender might also work an arrangement where a homeowner can remain in the home until finding a place to move into. Owners in default should negotiate the right to retain occupancy, arguing that if the lender followed through on the foreclosure, an owner would still enjoy the right of possession during that procedure
- Consider bankruptcy: A legal action such a bankruptcy can stop all foreclosure action. Call a lawyer who specializes in filing for bankruptcy and ask for a thorough explanation of all your options, costs and time frame involved. It won’t permanently stop a foreclosure action but it can postpone it.
Sell Your House To Avoid The Foreclosure
Maybe you simply want to put an end to a difficult situation.
The house may no longer be affordable for you, and that is ok!
Things change whether it be a job loss, people moving in or out, an illness, new addition, education costs and so much more.
There are all kinds of things that happen in life that might change your ability to pay back your loan.
There is no shame in this, however, you should work on finding a solution that works!
If you decide to sell your house in the traditional sense, without negotiating a short sale with the lender, there are two main ways you can go.
The first would be to put your house on the MLS with an Atlanta agent.
The second would be to sell your house directly to a private buyer in a short amount of time without any additional costs to you.
Listing Your House During Foreclosure
Depending on where you stand financially, this may or may not be a wise option.
Listing your Atlanta house can take months, and if your agent isn’t working with the urgency they should be, you might find yourself losing your house to the bank because your agent wasn’t able to find a buyer in time.
In addition, you will have to deal with out of pocket costs that may be difficult to pay if you are struggling financially.
If your mortgage is behind, it is highly likely that you haven’t been able to keep up with the maintenance on the home either.
For a listing to be successful, you will need to get the house into the best shape you can.
Selling Directly to an Investor
A direct sale is a preferred choice for many people who are facing foreclosure.
Not all buyers are the same.
When you choose to sell your Atlanta house to Breyer Home Buyers, you can rest assured you will receive a fair price and a fast closing.
We understand that difficult financial situations can happen to anyone at any time.
We have all been there, there is no shame in it! Let us help you with a fast and fair sell of your Atlanta house!