Having your own house is something that many people dream of. It costs a lot of money, and not many can actually pay them upfront. Thus, making a mortgage loan becomes a great solution for a lot of people.
Taking a mortgage is a lifesaver when it comes to having a house. But sometimes, things aren’t going as planned which resulted in financial setbacks that hinder you in paying your owed money. If this keeps happening, you may end up in a situation where you face a foreclosure.
What is Home Foreclosure?
Paying a mortgage on your dream home requires a lot of discipline, financial planning, and saving to make sure that you can fully pay what you owed to your lender. But, in real-life practice, a lot of factors can make your life going off tracks.
Some financial setbacks that may be affecting your payment might be losing a job, your interest rates going crazy, credit card debt, or others. So, what is the solution for your payment?
Home foreclosure is one of the options that you can take if you behind on your payment. Foreclosure is an involuntary act where you lose your home to the lender as a result of your inability to pay.
This is the last resort in which the lender gives to you after you fail to pay the debt that you owe to them. The home is taken away as the collateral of your deal that you signed beforehand.
What Do You Lose?
Not only does you and your family were forced to move out of the home that you’ve been living, you have to take out of pocket money to fight the foreclosure.
The money that you have to spend comes from the charge penalties that your lender obligated you as well as the legal fees you needed. After the foreclosure, you may even still own some debt to your lender.
This is because your house price isn’t sufficient enough to cover it.
Foreclosure on your home is the worst nightmare that you get to experience. If you lose your home from foreclosure, your credit score will be completely wrecked.
The bad credit score will stay on your record, which then will affect your overall financial life. It will be hard for you to get approved on anything, even getting a new home to live is going to cost you the world. As best as you could avoid getting your home foreclosure.
The Foreclosure Process
If you late on payment for only one or two months, you can be relieved. There is a way to prevent you from getting evicted from your home. The foreclosure process is relatively long.
Lenders typically won’t process the foreclosure until you don’t pay for three months back to back. Though it might not be applied to all lenders. That’s why it’s important to really study your agreement before you sign them.
Once you missed the payment, you will get notices from your lender. Inside, it usually states the intent of your lender wanting to go for the foreclosure process. Thus, it’s suggested that if you miss any payment because of human error and not because you can’t pay for it, you should communicate immediately with your lender. This is to avoid the foreclosure to proceed.
Depends on the state that you live in, the process is going to be varied. For judicial state, your lender has to bring you through courts to foreclose your house. It takes a long time between 30 to 90 days. If you live in a non-judicial state, there is no judge needed to be involved. Lenders foreclose your house based on the agreement that you signed but still involving attorney to supervise the process.
Foreclosure Home for Sale and Auction
There are two options of where your house is going to end up if you don’t have the sum of money to pay for the mortgage. Those are the foreclosure home for auction or foreclosure home for sale.
This is a great way to get some relieve and help financially from a complete lost by letting go of your house. You can register your home for sale and auction through your lender or other partners to ease the process.
If you’re looking to buy a new house, foreclosure home is a great way to get a good deal. Homeowners that are facing foreclosure are usually trying to sell the house as quickly as they can.
This means that you have a higher possibility of getting the house below the market prices. It’s a great deal considering real estate prices are keep going up year by year. If you’re lucky, you can get the foreclosure home with a great deal in a great neighborhood.
There is also a foreclosure home for auction that you can go through to get the best deal in house pricing. At this event, you will bid against many people that have the same eyes at what you want.
For both of the process, you have to do the research properly to make sure that you buy at a reasonable price. Narrow down on the area that you want and compare the price of the property in recent months. If the price at the auction is too high, you best let the house go.
Foreclosure vs Short Sale
People have been debating whether they want to fight for the foreclosure or to just short sale their house. Even though both of them require you to still let go of your house, short sale might be the better solution if you’re on the brink of foreclose. It’s because if you face foreclosure, not only you do lose your house, your credit score will tank which will hinder you from getting another housing or basically anything.
While if you’re taking short sale as the solution of your fail payment, you will get a much more benefit. Though you still have to lose your house, you will gain a bit of money from the sale of your house. Typically, in short selling, you will get less amount in what you owed.
The rest of the payment is still your responsibility. But, this action will save your credit score which resulting in you still having a good financial report for later, especially if you’re planning on taking another home.
No matter what, foreclose on your home is a nightmare that hopefully you never got to experience. That’s why to avoid getting foreclose all together, it’s best if you buy a house without a loan.
There are still many wide selections of reasonably priced housing that you can find. With a great financial planning and responsible saving, you will be able to afford one in just a few years.