Everything You Need to Know About Foreclosure – A Comprehensive Guide

Many people in the U.S. are facing the situation of foreclosure. Before drilling into details, let’s have a look at a comprehensive definition of foreclosure.

“Foreclosure is the result in the event where a borrower fails to make timely payments for their mortgaged properties. The mortgaged property, in such a situation, is possessed by the lender.”

There is a myth related to foreclosure that the lender or the bank initiate the procedure of foreclosing as soon as the debt period expires. There is absolutely no truth in it as the lender always wants their money back. In the event of foreclosure, the lender also has to forego the interest accumulated on the principal amount. Furthermore, the process of foreclosure is a time-consuming one hence the lender may have to wait for a long period of time before getting their money back. A lender only opts for the option of foreclosure when there is no hope of recovering their money.

There can be various options for the borrower to avoid the situation of foreclosure despite having received a one-week ultimatum from the lender. The first way is to talk it to out with the lender and work out a payment plan. The borrower can request the lender to schedule a late payment date. In most cases, the lender has nothing to do with your mortgaged property; all they want is their money back, along with accumulated interest. Hence, there are greater chances of them scheduling a future payment date. In the case of failed negotiations with the lender, the borrower can consult a foreclosure consultant who can assist in finding the possibilities of avoiding foreclosure and earning a bad credit on the borrower’s name.

It is true to a certain extent that there are very slim chances of a borrower obtaining another home loan after a foreclosure situation. Many banks or lenders will feel reluctant to grant you another home loan after foreclosure. Moreover, the property that is foreclosed is auctioned for an amount that is lower than the actual value; hence, the borrower is still responsible for making the outstanding amount.

If in an event, the lender is threatening the borrower to send them to jail in case of nonpayment, the borrower can file a formal complaint against them. The lender has only the right to possess their mortgaged property and ask for the outstanding amount and interest (if any). They cannot send the borrower to jail under any circumstances.

The long and short of this story is that foreclosure is a process that a borrower must avoid at any cost. Apart from giving you a bad name in credit score, it also makes it difficult for them to avail another home loan. Hence, it is recommended to make timely payments if you have mortgaged your property to avoiding landing in such unfavorable circumstances. If you can’t make your payments or are facing foreclosure there is another option, and that’s a cash offer. Companies like BuyMyHouseToday.com, HomeOfferASAP.com and LightningHomeOffer.com can offer competitive solutions to your home selling problems.

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Avoid These Top 7 Mistakes When Facing A Foreclosure

If you’re facing a foreclosure, the first thing you need to do is to take a deep breath. Really! When you’re in the middle of a big problem that you don’t know how to handle or how to solve it, one of the things you need to be able to do is to maintain your calm, for as hard as it may be. There’s no point in getting anxious, angry, frustrated. At this point, you just need to deal with the situation the best way you can.

So, in order to help you, here are the top mistakes most people in your situation do. By looking at them and learning from them, you’ll be able to avoid them and to make better calls.

#1: Ignoring Your Lenders:

No matter how embarrassing it may be, you just can’t avoid your lenders forever. The truth is that the problem won’t go away because you ignore them. In some occasions, your lender may actually have a proposition or deal to offer you that allows you to save your home.

#2: Not Trying To Restructure Or Negotiate:

When you’re dealing with a foreclosure, you may become hard on yourself and may lack some good sense. When you look at this from an outsider perspective, you’ll understand that the lender doesn’t have any interest in taking your home. And in case you think that just because you can’t make your payments that foreclosure is your only option, you’re wrong. When the lender takes your property, they will need to pay the taxes, the loss of payments, and keep up the property. So, a restructure is almost always possible, but your lender may not let you know that right away . And the only way to find out is to talk to your lender.

#3: Not Considering All The Options You Have:

When you know that you may need to face foreclosure, you need to know that you have options. One of the is restructuring your loan. However, you have others. You may decide that the best option for you is to declare Chapter 13 bankruptcy. When this happens, the foreclosure process stops and they will look at your financial situation and you might even be able to stay at your home since the court will restructure your payment plan accordingly.

#4: Damaging The Property:

We know and understand why you’re mad. But unload your anger and frustration on your property may only turn things worse. Please notice that you may have serious legal consequences for doing this.

#5: Not Considering A Short Sale:

In a short sale, you will need to find a buyer for your home. The main advantage for the buyer that you find is that he will be able to buy it for less that what you owe to your lender. You still need to have the lender’s approval but in case you do, you’ll avoid the legal judgement against you because of the foreclosure and despite your credit score may be affected, it won’t be as much as if you face foreclosure.

#6: Work With An Investor to Sell Your Home

Foreclosure ruins your credit and your chances of owning another home anytime soon. Also the home financing landscape is complex and there are a lot of hidden pitfalls. If you want to really take your situation and turn it around, one smart way is to work with an investor. An investor has access to the capital and the expertise you do not and will be able to make you a deal on your home, solve your financial problems and make you an offer that will satisfy your bottomline. One thing to understand when working with an investor, is that they can save you money on real estate agents, closing costs, escrow costs, repairs, and even buy from you as is. So while their offer may be lower than the “retail” price, when you have to deduct all the costs involved including the realtor fees (6%), closing costs (1-3%), repairs, rehabs, financing costs, etc, their offer usually is the better offer. To find an investor quickly we have found a portal that connects homesellers with expert investors in your area HERE: BuyMyHouseToday.com

BuyMyHouseToday.com searches the landscape of home investors to connect you with the best option for you location and needs.

#7: Working with a Real Estate Agent

While everyone thinks that the way to sell your home is through a real estate agent, there is a lot of evidence to suggest that this may be the WORST option you have. Many real estate agents do not fully understand home financing, and simply will get a very large commission (up to 6%, or $6,000 per $100,000) to simply put a sign on your front lawn and list the property on the MLS. This process can take MONTHS or YEARS. Make sure to consider all options before you simply hire a real estate agent, who in many instances can do more harm than good.

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Facing Foreclosure? Here are some tips to save your credit score.

A good credit rating is vital to financial health. Your credit score will determine the interest rate when getting a loan, the limit and interest rate for a credit card and may even affect your ability to get a job. Facing a foreclosure is bad enough. It is likely to give your financial standing a thorough beating. Your credit rating could fall by between 300-400 points. However, there is a way to still salvage it.

1. Keep The Existing Lines Of Credit
Most credit card companies are likely to close your cards when they discover that you have defaulted on your mortgage. However, it is not all who take this step. You may still have access to financing though it will be more expensive and with more restrictions. The few existing lines of credit are extremely valuable. Keep them as healthy as possible. The companies will threaten to close the lines or raise your interest rates. The best approach is to call them with a detailed explanation as well as a promise and plan to rectify the situation. As long as you meet your obligations, most companies will leave you alone.

2. Use A Secured Credit Card
This is a card whose limit is secured using a deposit in a bank account that you cannot access. The challenge is that these cards are expensive to obtain. You have substantially high application fees, billing and annual fees. However, if you are committed to maintaining a perfect repayment history, your credit ratings will improve.

3. Go To The Local Credit Union
There is a reason why many people love and turn to local credit unions when they are in financial difficulties. To begin with, they only lend to members. This gives them a better sense of your financial cash flow. With your banking history, they will consider you a lower risk client and thus extend the facility you are looking for. The union will focus more on your incoming cash and what is going out and then disperse cash on this basis. This will improve your score over time and may in fact help you to overcome the foreclosure.

4. Work On All Monthly Payments And Debts
What negatively affects your credit score most is late payment. When one line is closed, it is important to improve on all others to keep them open. Focus on clearing debts and bills that remain active. Create a long positive repayment history. The referencing bureau will take note of the positive trend on other lines and thus be willing to revise your score. Personal lines of credit, credit cards, car loans will be used to plead your case. Even simple and localized bills like gym, internet and cell phone services will determine your long term credit health. It is also advisable to wait until the ratings improve before applying for another credit facility. Though your rating will not return to its previous position over some time, creditors are ready to overlook your distance past in favor of the current position. You will need to actively work on your rating by planning for a more positive financial future after foreclosure.

5. Sell Your Home Through An Accredited Cash Transaction
If you have exhausted your other options, don’t have the money to make any more payments, or simply want a smart, fast and easy solution for your home loan troubles. There are a number of companies that buy houses fast but not all are the same. We have a list here of the top five home buying companies in your area here. If you’d like to receive a fast and free home offer from the top company on our list, navigate to BuyMyHouseToday.com. The difference between this company and the other companies is while the other companies offer only one option, a discounted cash offer, BuyMyHouseToday.com offers over 20 different options to customize a solution to your timeline and your bottom line. They can give you a great competitive offer on your home allowing you to close in as little as five days. And they will work with whatever issues you have to save you from foreclosure and give you what you need to feel comfortable in your next steps.

With these five steps, you’re on your way to better credit and a brighter financial future!

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