One of the worries of homeowners is the foreclosure of their homes. Most of them don’t know how to stop one from happening. Losing their home was the furthest thing from their mind when they first bought it.
There are many reasons that force homeowners to stop making timely mortgage payments. Some of the common reasons include losing a job, sudden illness/medical bills, death in the family, excessive debt obligations, downsizing, moving, and divorce.
If you find yourself in one of these situations, you might be looking for ways on how to avoid foreclosure. Below are some tips that can help you prevent a foreclosure from happening.
Don’t Go into Panic Mode
The first thing that you should do is to be calm. You should not panic if you missed a mortgage payment. You should contact your lender and try to come up with a plan. The lender knows that you are in default when it already passed the due date of your mortgage payment.
You should not wait for the lender to call you but instead contact them as soon as you realize that you can’t make the payment. Lenders deal with defaulted customers all the time, and they provide good advice. A foreclosure is an expensive and tedious process, and that’s why lenders want to help their defaulted customers.
Affordable Alternative Initiatives
Another way to avoid foreclosures is through the Home Affordable Foreclosure Alternatives Program. The initiative can provide you with a way to exit your home, and get rid of your remaining debt. Often, they will offer a deed-in-lieu of foreclosure. The good news is that HAFA doesn’t affect your credit score as much as a foreclosure. You can recover from it faster.
Sell Your Home
However, there are instances in which the two options mentioned above can’t help prevent a foreclosure. If that’s the case, your only option is to sell your house. It is the best way to get out of debt and get a new house.
There are many benefits to selling your house before foreclosure happens. There will be no evidence of foreclosure in your credit record. You will also have cash that you can use for your equity.
When you sell your house, you are in a positive position. You reduce your financial burden and able to repair your credit history in the process. There are instances in which selling your home is the only solution to prevent a looming foreclosure.
How a Foreclosure Will Affect Your Future
Since the recession began, more than 4 million homes have been foreclosed upon. If you’re one of the homeowners whose home was or is being foreclosed upon, you may be wondering what’s going to happen next. How long will the foreclosure process take and how will it impact your financial future? This guide can help.
Will a foreclosure impact my credit score?
Unfortunately, a foreclosure hurts your credit score, which means that it will be harder and sometimes impossible to get credit cards and loans in the coming years and that you can expect to pay higher interest rates. Plus, some employers look at your credit score, which means that it may make it more difficult to land a job.
Experts estimate that a foreclosure will lead to a dip in your credit score of about 200 or 300 points. So let’s say you had a near-perfect 800 FICO score pre-foreclosure; after the foreclosure, you might have a credit score that was more in the 600 or lower range, which is considered bad (FICO scores range from 300 to 850).
The good news is that foreclosures will clear your credit report after seven years and that if it was an isolated incident — you didn’t also default on a bunch of other payments — it won’t have as large of an impact on your credit score. Going forward, try to pay all of your bills on time and minimize the amount of money you owe, as these can help boost your credit score.
How long do I have to wait until I can buy a home again?
If you’ve been through a foreclosure, you can expect to have to wait between about three and seven years — depending on why you defaulted, your current credit score, and the type of loan you’re applying for, among other factors — before buying a home again.
Buyers who lost their homes due to economic hardships such as losing their job, illness or getting a divorce may have to wait less time to buy a home than those who walked away from an underwater mortgage even though they were able to pay or those who couldn’t pay once the rate increases on their adjustable-rate mortgage kicked in, experts say. Potential buyers must show that since the foreclosure they have raised their credit score significantly by paying all bills on time and not taking on too much debt. The time period you have to wait before buying again also depends on your lender.
For example, Fannie Mae requires borrowers to wait five to seven years to buy after a foreclosure and three to seven after a foreclosure with “extenuating circumstances’ (which are factors such as illness and severe injury that were beyond your control).
Avoid Foreclosure and Sell Your Home Fast in Dallas – Fort Worth, TX
The fastest way to sell your home fast in Dallas-Fort Worth is through Super Cash for Houses. We help sell your home fast for cash. We know how frustrating it is to go through foreclosure, and we try our best to buy your home when you need money.
By selling your home to Super Cash for Houses, you save time and effort. We buy homes as-is. There’s no need to repair or renovate the house before selling it. Just send in an application, and we will give an offer within 24 hours.