Having a hard time making your mortgage payments? You are not alone. There are many homeowners across Hampton Roads- our neighbors- who are struggling to make their monthly mortgages due to job loss, disability, or other challenging life events.
When you’ve poured so much time, money, and energy into your home, it can be extremely stressful when the possibility of foreclosure arises. It’s a word that nobody wants to hear- unless you’re the bank.
Is this really happening? you might be wondering. After everything I’ve invested, the bank is just gong to take my house? What am I supposed to do?
The truth is, foreclosure does not have to be your fate.
Here are 4 alternatives to foreclosure you should know about if you’re a homeowner in Hampton Roads:
1. Loan modification
Loan modification is a way for homeowners in Hampton Roads
to avoid foreclosure by altering the terms of their existing loan. To do this, your lender may agree to lower your interest rate or extend the length of time over which your loan is repaid. This could lower your monthly payments to a rate that you can manage.
What’s important to remember about loan modification is that it will not change your existing principal amount. It also requires that you work with your existing lender (as opposed to refinancing with another lender).
Here’s the catch: although a large number of people apply for loan modifications, less than 10% of applicants are successful in obtaining the relief they need to avoid foreclosure.
In addition, to qualify for a loan modification, you must usually be at least three months behind on your mortgage payments and in default. And at this point, your credit is already starting to take a hit.
Although a loan modification may be the best available option for some, it is not the only option.
Like foreclosure, the word “bankruptcy” may elicit feelings of exasperation and hopelessness. Nobody buys a home thinking that their journey may lead here. But let’s explore this option, because it may provide some relief for you and your family.
When you file for bankruptcy, something called an “automatic stay” goes into immediate effect. This acts as an injunction, or bar, that stops attempts to collect debts or enforce liens while your case is active.
The good news here is that an automatic stay can buy you some time before further action is taken regarding your house. However, if you’ve had one or more previous bankruptcy cases dismissed in the past year, an automatic stay may not go into effect. Your lender may also request the court to lift the stay so it can proceed with foreclosure.
Let’s say that an automatic stay goes unchallenged in your case. What happens next?
In a Chapter 7 bankruptcy, your automatic stay would allow time for your appointed trustee to sell your property in an attempt to pay your debts. This could provide you time to make other housing arrangements or entitle you to excess proceeds from a sale if your home has enough equity.
In a Chapter 13 bankruptcy, you’ll work with a court-appointed trustee to create a repayment plan that lasts three to five years, including paying back the money you owe on your mortgage. But, you must meet certain income requirements and you will not be able to prevent foreclosure if you’re unable to keep up with your payments after your plan is approved.
But what if you want to avoid the hassle and credit impact of a bankruptcy? Let’s explore another option.
3. Short Sale
A short sale, also known as a pre-foreclosure sale, is a property sale in which the bank agrees to accept a payoff from a buyer that is less than what they are owed. The house must be listed and a marketed by a REALTOR®, and this is a process that averages 3-9 months to complete or longer. These deals also tend to fall through as they require lots of paperwork and negotiations.
When you sell your home in a short sale, you won’t owe any more money on your house, but you also won’t get any money from the deal. Since you’ll probably need to find another place to live, that might make your next steps difficult to make without any cash from the sale. You’ll also be damaging your credit — but not as badly as if you let your home go into foreclosure.
It’s important to remember, though, that if your lender thinks they can make more money by foreclosing on the property, they might not accept the short sale offer.
While a short sale may offer a better outcome than foreclosure, there’s another option that you might not have considered that can actually put cash into your pocket.
4. Quick Sale to a “We Buy Houses” Company
Selling your house to a fast cash home buyer, commonly known as a “we buy houses” company, may provide quick relief from the foreclosure process. These are real estate investors in Hampton Roads who are equipped to pay you cash for your property, in as little as 7 days, for the opportunity to “fix and flip” your house.
When you work with a “we buy houses” company like Integrity Cash Home Buyers
, you skip the renovations, the showings, and the fees of a traditional home sale and drastically reduce the length of the selling process. Depending on how much you owe on your house, the money you receive from the sale could be used to pay off your mortgage and fund your next move, completely halting a foreclosure in its tracks.
What’s important about a quick sale is that you receive the fairest offer for your house possible. Since you are not likely to receive as much as you would in a traditional home sale, the type of “we buy houses” you work with can make or break your experience. You’ll want to work with a local, reputable, and transparent company with experience buying properties for cash in Hampton Roads. Look for a company with great online reviews, like Integrity Cash Home Buyers, who is open and willing to answer all your questions about the quick sale process.
About Integrity Cash Home Buyers
We only make fast, fair offers—with no hidden fees and no commissions—so you can sell your house, release the stress, and move forward with integrity.