can i sell my house before foreclosure

Can I Sell My House Before Foreclosure?

Although few homeowners think about the potential of foreclosure when signing the paperwork for their mortgage, it is a reality that many must face when money becomes tight.

Foreclosure is the act of repossessing a mortgaged property after the owner of the property fails to pay the mortgage as agreed upon. Foreclosure is a stressful time for many homeowners.

In many instances, selling your home to avoid foreclosure can be an excellent strategy. Especially since the alternative, which is typically bankruptcy, can leave your credit rating damaged for years.

By learning how to answer the question, “can I sell my house before foreclosure?” making an informed decision should be achievable.

Life Is Unpredictable

When financial tragedy strikes, shame and fear often prevent people from seeking effective, timely solutions.

Sometimes, the stress of dealing with creditors in the context of life events only compounds the issue, leaving you feeling further isolated and deeper in debt.

Common Misconceptions about Stopping Foreclosure

There are many misconceptions about how to stop foreclosure. For example, friends and family may tell you bankruptcy is the answer.

You should be aware that bankruptcy protection against creditors collection efforts is only temporary.

It is also important for you to understand that under a chapter 13 bankruptcy, you are required to have sufficient income to make payments against arrears in addition to making your regularly scheduled mortgage payment.

Essentially, you must have an income sufficient to repay the loan in order to qualify to file bankruptcy.

Others may advise you to contact your lender and request a modification. While it may be true that lenders are sometimes willing to modify the terms of your loan, the factors that go into determining who receives a loan modification are quite arbitrary.

And still, there is no guarantee you will be approved for the modification. Furthermore, many modifications and repayment plans do not stop foreclosure. The foreclosure is simply placed on hold while you meet the payment obligations of your repayment plan.

In the event you are unable to comply, the foreclosure proceedings resume. Meanwhile, the interest on your loan continues to accrue on a daily basis.

There is also the option of selling your home through a realtor, but it is a time-consuming and costly process – especially during the winter months.

Aside from the real estate commission, your realtor will charge you, you may also be required to make costly repairs to the property in order for your property to pass inspection. Additional complications could arise with a potential purchaser’s financing further complicating the sales process.

Stop Foreclosure with a Short Sale

A short sale is a tactic which is typically utilized if the value of the home is lower than the amount currently owed.

However, if the value of the home is higher than the amount you owe, it makes more financial sense to put it on the market for full price and take your chances with finding a buyer.

Just because you are eligible doesn’t mean you can short sale your home to stop foreclosure. You have to convince the bank or the mortgage company to allow a short sale.

A short sale means the lender is going to lose money, so they are going to take a very hard look at a short sale.

That’s where a professional can make the difference between getting approved for a short sale and the bank deciding to go ahead with a foreclosure. We know what banks look for,

We know what they want, and we know what to give them so you have the best possible chance of succeeding in a short sale.

The bank wants proof that continuing to make mortgage payments, and payments on a repair loan if needed, is more than you can handle.

This is much more than just saying, “I’m a broker.”It requires a detailed letter with plenty of explanation.

The bank will also demand proof that the home’s value is less than what’s owed on the mortgage. The lender is not going to take your word for it.

Proof means an appraisal by an expert, a list of similar properties in the community and what they sold for, and a professional estimate of how long it will take to sell the house without incurring a loss.

How To Sell Your Home Fast

It is vital for your house to stand out from the others. You do not have to hire an expensive home staging company to get the ‘SOLD” sign in your front yard. You can sell your house to property agents who buy properties for cash.

Also, consider these affordable home-staging ideas to appeal to the buyer:

1. Roll out a Welcome Mat

When it comes to selling your house, first impressions are vital. An appealing doorstep is imperative. A fresh mat that matches the style of your home will appeal to buyers.

Also, add some green plants by the entrance to add the magic. This signals the buyer that the house is well-maintained.

2. Mount Mirrors in Strategic Areas

A dim hallway with low natural light repels buyers. To solve this issue, hang a few mirrors.

Mirrors are ideal when placed next to a window. Again, mirrors have the tendency to make smaller rooms appear bigger.

3. Set Serving Areas and Tables for Entertaining

Set the scene by giving the potential buyers a feeling of life as a host in their home-to-be. So, when staging, remember to set the tables and bar area.

You do not have to set up a fancy layout, but solid plates, wine glasses, matching bowls, and cloth napkins in the dining project the feel of family meals.

4. Consider Artwork

The prospective buyers want to picture themselves in the home; not you. So, if you had turned your house into a family setting by hanging family mementos and portraits, think of replacing them with gender-neutral artwork.

Canvas artworks create a focal point for the house and appear lovely in the listing photos.

Consider Alternative Options

In most situations, the only way to generally avoid foreclosure if missing payments has become imminent is a short sale.

Short sales often end with you losing a significant portion of the money you have invested into the mortgage, as the only way to attract a buyer in such a short period of time is to list the property well under the current market value for similar homes in the area.

Some alternatives to this option include negotiating a lower monthly mortgage payment with your lender or a period where it is acceptable for no payments to be made, as long as the amount owed is added on to future payments.

Another option is to find a renter who will either agree to rent the entire home or sublease while you are still living there.

If you might still be wondering how to stop foreclosure, just make use of the following points.

Contact Your Lender Beforehand

One of the most effective ways of preventing foreclosure is by contacting your lender and explaining to him/her about your current financial situation. By doing your lender will study your situation and decide on the way forward.

Though this may not prevent the eventual foreclosure, it will give you sufficient time to arrange yourself and decide on the way forward.

Hire a Housing Counsellor

A housing counselor is your ultimate game changer when facing a foreclosure possibility. These professionals work with the lenders and decide the best way forward to deal with your situation.

They are of great importance especially if you are not versed in mortgage laws.

Modify Your Loan Repayment Agreement

Trying to modify the repayment options previously agreed upon with your lender can also be a lifesaver. In most cases, lenders may prefer a 20% decrease of the repayment agreed upon rather than 100% of nothing.

However, you should not really count on having your loan repayment revised. The notion behind this is the fact that some lenders are not usually willing to rescind on their initially agreed agreement.

However, this should not discourage you. It is always good to try since you never know the outcome.

Declare Yourself Bankrupt

Many homeowners have kept their foreclosure-threatened houses by declaring themselves bankrupt. A bankruptcy situation will help you avoid foreclosure or reduce the amount of money paid out to your lender.

The moment you file for bankruptcy, any foreclosure plan that was underway is usually blocked with immediate effect. You must, however, present all the documents that confirm your bankruptcy situation.

After catastrophic life events and unforeseen economic factors, millions of people have found themselves facing foreclosure and the prospect of enduring years of declined credit applications, paying higher rates for insurance, and possibly even being denied employment as a result of their damaged credit histories.

We understand the difficulties you are facing and our fast and easy process was developed to provide you with the financial solution you need when you need it.

Contact us for more advice on the question”: “Can I sell my house before foreclosure?”

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