How To Avoid Foreclosure in Houston?
1st Step – Talk to your lender
Life happens… All of a sudden you find yourself behind payments on the mortgage of your Houston TX home and wondering.. “What are my options if I am behind payments or pending a foreclosure?”, we understand. Whether its a job situation such as a job loss, loss of income, health or life event it is quite common to find yourself in this position but there are many options and paths to analyze. Let’s talk through some of the scenarios and solutions regarding How to Avoid Foreclosure in Houston.
As obvious as it may sound, your first call should be to your lender to understand if there are any available programs such as loan modifications or refinance options available to you.
If in fact, you have received a foreclosure notice this may be in fact a bit too late but at a minimum, you may want to consider having an open and transparent conversation with your lender so you can understand any present options available through them.
Texas is a trustee state, which means in the case of failure to make your loan payments, your home can be sold at the request of the lender without any court intervention. According to the laws of Texas, foreclosures take place on the first Tuesday of a given month. Even if it happens to be a public holiday, the foreclosure sales will occur anyway. Before starting the process of foreclosure, the lender sends a letter that allows you at least 20 days to pay the default amount on the loan. When the given period expires, the lender starts the foreclosure by mailing you a notice mentioning the amount due and the schedule of the sale.
It is important for you to understand your own current loan situation, figures and timeline so you can make an informed decision on your next step.
It is also crucial to understand directly from your lender key factors such as:
- Foreclosure Date
- Loan Repayment Amounts
- Accumulated Arrears Payment Balances
- Accumulate Late and Lender Fees
- Loan Principal Balance
2nd Step – How To Delay or Stop Foreclosure
It is quite a stressful situation when your home in Houston Texas is at the risk of foreclosure due to non-payment of the mortgage. However, there are ways to help avoid foreclosure fast and make the impact as little as possible on your life. If you want to avoid foreclosure fast you need to know what options you have. You need to be aware of the mistakes people usually make facing foreclosure. Since one mistake can cost your home and considerable financial loss, whatever option you choose must be contemplated with professional assistance. One of the best options you can possibly have is to sell your house AS-IS. You can pay the amount owed to the lender and still make a profit out of the house.
File for Bankruptcy
Generally the most known option to stop foreclosure but at the same time the most sever on your credit report, this option may be for you if you are determined to stay in your property for more than 10 years and do not need any credit for other life matters such as credit cards, cellphones or even employment. It will also take a financial investment in attorney fees for retainers and monthly Bankruptcy payments to stay through the process. Be prepared to weather the expenses and manage the credit impacts of this option. You can find a lot more technical details here in this link.
- VERIFIED – This is a proven way to prevent foreclosure.
- CREDIT REPORT EFFECTS – It is one-off, if not the worst Credit Report distresses to have.
- MONEY – It is typically upfront and monthly cost to stay in BKPTCY with an attorney.
Apply for Loan Modification
If you are proactive in conversation with your bank this may be great fit for you but do not wait until last minute to start working the process and banks are not necessarily proactive in this manner and this requires time windows for reviews and approval. Raise this option with your lender as soon as possible to prevent even the scheduling of a foreclosure at the county steps.
- CREDIT REPORT EFFECTS – This is probably the least credit report adverse method and allows you stay in your property if approved.
- TIMELINE – Need to start working early in the process with the bank and not up until a few weeks prior to being foreclosed.
- MAY NOT BE APPROVED – Most loan modifications have a very thorough process, not all are feasible and depend very much on the lender and loan standing history with the lender.
Short Sale Process
This is a popular option if you are behind payments, want more time to stay in your property and do not want the negative effects of a foreclosure or bankruptcy in your credit report while at the same time acknowledging that the balance owed might be really close to market value in its current condition or even owing more than what the value is with arrears. Seek professional help with this type of approach to be successful it takes specialized knowledge but it should not be at your costs, unlike the Bankruptcy process. We do have a specialized department that manages the Short Sale process for our sellers in a complete manner from initiation, stopping foreclosure with a hardship letter (without bankruptcy) all the way to closing at no cost to you.
- EXTENDED OCCUPANCY TIME – The short sale process is a lengthy (3-9 Months) but effective process especially if your house mortgage amount is equal or exceeds the current value of the property, this allows you more stay time in the property while it sells if approved via the bank.
- RELOCATION COMPENSATION POTENTIAL – It is possible, although not guaranteed, that a seller may be eligible for relocation distress compensation usually in th $2,000 to $4,000 range depending upon final terms with bank. This would help you make your transition a lot smoother.
- SPECIALIZED KNOWLEDGE – This process requires a professional Short Sale Agent that manages the process from A to Z for it to be completely successful. It is not a DIY (Do It Yourself Process) and requires specialized knowledge.
- MAY NOT BE APPROVED – In order for the short sale process to be approved a professional Short Sale agent must promptly communicate with the bank with the required forms and contracts. It is vital to work with a Short Sale professional that manages this specialized knowledge cases in a day to day basis.
- CREDIT REPORT EFFECTS – The short sale distress will show on your credit report but is considered much less harmful than a Bankruptcy or Foreclosure and is removed in about half the time (Approximately 5 years) so you still have enough credit to manage your day to day life in comparison to the much worse effects of Bankruptcy or Foreclosure.
Cash Offer Sale
If your property has some equity and you would like to salvage your credit in the most effective way possible for a fresh start a Move On Cash Offer may be your best fit. Simple and effective a cash offer allows you to Move On, pay the loan off and get cash in your hand after the sale all without having to make further investments or repairs and lengthy timelines with the uncertainty of the open market sale.
- ELIMINATES FORECLOSURE – If a Cash Offer is accepted between a private buyer and seller the foreclosure process is completely eliminated. The foreclosure process gets eliminated due to the earlier cash sale in the time period allowed.
- IMPROVES CREDIT REPAYMENT HISTORY – Due to the effectiveness of a cash offer the loan is repaid in full and credit report updated with loan repayment history helping improve your credit report history with behind payments.
- NOT FULL MARKET VALUE SALE – A cash offer is usually available and provided by local house buying companies such as a Move On House Buyers, in which a Fair Cash Offer is provided accounting all of the costs involved with buying, selling, repairing and updating a home allowing for a business profit. Due to the sensitiveness of the timeline and what is at stake we highly recommend heavily vetting the house buying service being used to determine high certainty of actual closing without delay.
Subject To Payments Sale
This is a specialized approach for houses that may not be fit for a cash offer due to lack of equity and are looking to salvage the personal credit of the borrower. This may not be the solution in every case and requires proper disclosures from all parties to be done successfully.
- ELIMINATES FORECLOSURE – If a Subject To payments offer is accepted between a private buyer and seller the foreclosure process is completely eliminated. The foreclosure process gets eliminated due to the earlier sale in the time period allowed.
- IMPROVES CREDIT REPAYMENT HISTORY – Due to the effectiveness of a a closing and re-instatement of the loan up to date with all amounts arrears with loan repayment history helping improve your credit report history with behind payments.
- DUE ON SALE CLAUSE – Most mortgage notes have a “Due On Sale Clause” but not many banks actually exercise it as long as all payments and insurance payments are made on time and kept. This is an inherent risk of the transaction because most mortgage are not assumable in the residential real estate arena.
- MORTGAGE STAYS IN CREDIT REPORT – The mortgage is not paid off although current. This means that it still shows in your credit report as the original borrower of the loan. As long as the payments are made on time it can actually be considered a Pro because it shows good repayment history on your credit report.
- NOT FULL MARKET VALUE SALE – Much like a cash offer, a Subject To Payments sale, is usually available and provided by local house buying companies such as a Move On House Buyers, in which a terms offer is provided accounting all of the costs involved with buying, selling, repairing and updating a home allowing for a business profit. Due to the sensitiveness of the timeline and what is at stake we highly recommend heavily vetting the house buying service being used to determine high certainty of actual closing without delay.
Pricing Your House
- Don’t try to salvage equity that does not exist. The fact that you bought your home for thousands more than homes are currently selling for in your neighbourhood is irrelevant to the current fair market value of your home. You have to get clear on your goal: Are you trying to take dollars out of your home by holding out for the highest price, or are you trying to avoid the seven-year black mark that a foreclosure will leave on your credit report?
- Don’t overprice your home. Get clear about what you want. If you’d like to get your home sold, make sure you price it aggressively and that means low. If your home is overpriced, some buyers won’t even see it because it will appear to be out of their price range. Other buyers will focus on seeing properties whose sellers seem more realistic about pricing. Your house will sit on the market longer than it should and then the lowballers will crawl out of the woodwork.
- Get real about what your home is worth. Have your real estate agent prepare a Comparative Market Analysis (CMA) that shows recently sold, similar homes in your neighbourhood. If you’re serious about getting it sold fast, take the sales prices (not the list prices) from the most recently sold homes in your area, and then go down 10 percent or so from there to get your list price. When a home is slightly underpriced, it seems like a bargain. More buyers will come out to see it, and chances of getting a qualified offer skyrocket.
- Make sure you have an accurate understanding of how low you can go. A buyer is not going to pay a premium price for your home just because that’s what you owe. If you owe more than your home is worth, give your lender a ring, complete a short sale application (see How to Get Your Lender to Agree to a Short Sale) and ask your lender to give you some indication of how low a sale price they will accept. Conform your list price to that (don’t forget to take closing costs into account); a short sale blemishes your credit but not as badly as a foreclosure does!
How much can I sell my Home for before a Foreclosure?
You can sell your home for as much as credited and qualified buyer is willing to pay for it. This is great news if you don’t owe very much on your defaulted mortgage. If you owe $40,000 to your lender, and your home is valued at $300,000, after all sale, transactional or repair costs the difference belongs to you.
You’re only responsible for paying your lender the full amount you owe, as well as any interest that applies to the loan. You may not be able to wait for a buyer who is prepared to offer $300,000 in cash before your foreclosure is finalized though.
In this scenario, regardless of which Investment company you choose to sell with, you will likely receive lower than market value. But as long as you can cover what you owe you will be in a much better position than not.
Selling at a lower than market price makes your home immediately attractive to Real Estate Investment companies or property flippers. Real Estate Investment companies won’t wait around either. They’ll jump on the opportunity to purchase your home the moment it becomes available.
Since they pay cash, you’ll be able to pay off your lender before the foreclosure and use any profits to set yourself up in a new living situation.
Whatever your situation or factors are let us help you make an informed decision.
Contact Us Today to Request Your Free Move On Cash Offer!