So you’ve missed a few payments, and now you received a notice from the bank that you’re facing foreclosure. Don’t panic! We’ll give you 6 options to help you get out of foreclosure and keep your house. Read on to find out what they are.
Option 1 – Come up with cash to prevent foreclosure.
This may seem like the obvious option, but it really is the first one worth mentioning. Come up with the cash to catch up on your loan. The thing with doing this to avoid foreclosure is actually having the cash in hand. To do that, I first recommend selling stuff you don’t need, like an extra car or those old toys from when you were a kid. (BTW, maybe you should check those toys out on eBay anyways, they may be worth more than you think and make some extra money.) Or you can cash some investments. It’s not ideal, but neither is facing foreclosure. This helps you get out of it quickly.
Option 2 (and option 3) – Get a personal loan for foreclosure help.
There are a couple of ways to go about doing this. The first one is to go to someone you know who has the money to lend and ask them. It’s advised to do this through a title company still and give them some assurance they will get paid back. It’s also going to be hard, and you’re going to be embarrassed. A personal loan like this has a higher success rate in my experience as long as the amount isn’t too much, as these people know you and your character. You aren’t just a number and process to them.
The other option for a personal loan is to go to a financial institution that does personal loans. They usually do it based on your credit score and income history, which may be good news if you haven’t been hit too hard on your credit yet. Another option I consider in this category is using a loan with collateral, like a 401k loan. Not all retirement companies will allow it, but it’s an excellent idea to see if they can help as this is already your money. I don’t recommend using a loan company based on your car or payday loan stores, as those rates can be high and put you in a worse situation.
Option 4 & 5 – Talk to your lender for help with foreclosures.
Your next two options have to do with talking to your lender. Sometimes, if you get to them early enough and explain the situation, they can offer you a couple of options that will allow you to keep your house and let you get back on your feet financially. You still have to pay them what you owe, but they can offer the option of a loan modification or even forbearance.
These options are a loan modification and forbearance. A loan modification is exactly what it sounds like. Your lender will modify the loan to make the payment more affordable. This will be by lowering the interest rate, extending the loan period, or reducing principal. The otherside of the coin on this is that it may have fees, cost more in the long run, or it may even hurt your credit. Forbearance is a process where the lender will allow you to pause your payment or reduce it for a period of time. The flipside of this is that they generally require repayment right away and it will only give you a short period of time to regain your financial footing. Both methods will depend on the lender’s requirements and their decision, but these options will help you get out of foreclosure and keep your home! Just remember to treat it like voting in Chicago, do it early and often!
Option 6 – Turn it into a rental to get assistance with foreclosure.
This may be the most complicated way to stop foreclosure and you end up moving from the house, but may help with options 1, 2, and 3. You’re probably asking how can you do this if you still owe money on it? Well, you’ll still need to catch up on the loan, but having the extra money on the rent may allow you to do just that. After you’ve caught it up, you’ll have extra income. As we said, the downside is that you need to find a place to live while your old home becomes a rental. There may be some additional work you’ll need to do, but you do get out of foreclosure and keep your house! That’s also the last option I have that lets you get out of foreclosure and maintain the property ownership.
If you think this is too much work and want to get rid of your house in foreclosure now, fill out this short form below. This will be one of the options coming up, but you can save time and close in as little as 5 days, leave the house as is, and save money on closing costs.
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Now we get to the options that let you ditch the property and get out of foreclosure, starting with the ones that generally make you the most money as long as you have equity in your house and you have the time. Are you ready?
Option 7/8 – List it with an agent for foreclosure help!
By listing with an agent you generally will have two options, and a good agent will walk you through both, and you can decide what’s best for you. The first option that generally nets you the most, is to rehab it, improve it, and list it to sell. Again, it will be market specific, and your agent will have a good idea about what to expect in your market. So talk to them and get their expert opinion when considering this one. When listing with an agent, the other option is to list it as is on the MLS. This option will almost always net you less than rehabbing it, but it gets it done quicker, and you still walk away with cash in your pocket. Again, you will need some equity in your property to do this, which will take time.
Options 9 and 10 – Selling your property in foreclosure to an investor.
If you are facing an auction or have little time to decide what to do, these options will allow for the quickest way to avoid foreclosure. The first way is a cash sale. You will need to have equity in the house for this to be an option, and you will be giving some equity for money for the convenience and speed a cash purchase allows. Each investor is different, but most cash buyer investors will use a very similar formula for their cash offer. Some may even take advantage of your situation and even give you a really low cash offer. The other option that some investors offer is a creative financing option. The easiest way to explain this is to tell you that they take over the payments on your loan. For this option, you don’t need any equity; it may even help you build your credit back up. When considering these options, I would talk to a few you like and see what they offer.
If you think this is the option you want to take regardless and want help with foreclosure now, fill out this form below and we’ll get in touch with you as soon as possible to find out about your situation. We’ve helped numerous people facing foreclosure and can help you.
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The last few options are ways to get out of foreclosure, but you lose the house in almost all of them, and they don’t help you do it quickly or with anything in your pocket. These are the worst options in our opinion, so please weigh these options carefully. So what are they?
Option 11 – Use a deed in lieu of foreclosure with the bank.
In this option, the bank takes your deed and terminates your mortgage. Yep, you make no payments, and you don’t have to worry about foreclosure. The are two concerns, the first is that banks aren’t known for wanting property. It’s not how they make money. So they may not want to do this at the end of the day. The second is that you lose all equity you have in the house. So you miss out on any money you may have invested.
12th option – Do a short sale and stop foreclosure now.
Why do I not recommend this? First, I must inform you that I am not a tax professional or CPA. Please talk to them to verify and see what the ramifications may be. Now that’s out of the way. There are two things to note about this. You may have to claim the difference between what the property sells for and your loan amount as income. Yeah, you read that right. You may have to pay income taxes on the difference. And the second thing you should know is that your lender can sue you for a deficiency judgment. That means that even though your lender approved the short sale, they will still want to make sure they have less loss on the loan. Who wants to do any of those things when they are already losing their house?!
13th and final option – File bankruptcy to help stopping foreclosure.
Let me clarify again: I am not a CPA or an attorney, so seek guidance for this option. The only real advantage here is that it delays the foreclosure while you figure out other options while the default completes. The whole point here is to give yourself time to exercise any of these other options. Doing this will eventually hurt your credit, and you still lose your house. It is an option for you, though.
So when you’re facing foreclosures and working through all of these options, don’t hesitate to reach out to someone who can help you start to walk through those options. You can contact us here, and we can begin to help you, or you can give us a call at (708) 415-3801. The biggest thing you need to do is to start the process early. You can get that process started by filling out the short form below.