Word on the street is that millions of homes are about to go through foreclosure and this is probably the reason why everyone is trying to understand the process and its ramifications. If you’re a buyer or a mortgage holder and you’re still seated thinking you don’t have to worry anything because you’re at a better financial position you need to think again! This piece will acquaint you with the pre-foreclosure process in Houston and let you in on solutions you can use.
No one can really dispute the fact that these are tough economic times. The cost of living is undesirably high and paying debts is becoming increasingly difficult. Most homeowners in Houston are already panicking.
A typical lender will issue a warning to a borrower who misses three to six months of mortgage payment reminding him or her to pay or risk losing their home. This is the period known as pre-foreclosure. Mortgage lenders and banking institutions usually offer a three month window to those homeowners who haven’t made any mortgage payment for. This will be the first and only warning.
If you still fail to pay anything the bank or mortgage lender will be forced to foreclose on the home, right away assuming ownership, and you’ll be handed an eviction notice. Fortunately, this is just the initial stage of the foreclosure process. That means as a holder you still have options to explore if you really want to save your Houston home.
Pre-foreclosure options for a borrower in Houston
Once you receive a ‘notice of default’ paper from the lender you’ll get the vibe that the situation is about to worsen really soon. The document will state the obvious. You’ll be reminded you haven’t made any payment for the last 90 or 180 days. Below are a few options worth exploring at this point:
- Find out whether the mortgage is ‘above water’
You have to first figure out if you have equity in your home. If you do, count yourself lucky because you can refinance your mortgage and hopefully receive lower monthly payments. You can visit your Houston mortgage broker or reach out to We Buy Fast Houston Houses if you need help determining your property’s equity.
The second option would be to sell now and use the cash to pay the debt instead of waiting for the bank to throw you out of the house. Selling a Houston house that’s about to be foreclosed is actually a smart move because you can use the proceeds to settle the mortgage and still remain with enough money for a fresh start.
- Go for a short sale
With a short sale, you can sell the property for an amount that’s less than its actual value and talk to the bank to treat the loss as a tax write-off. Sometimes you may be forced to pay the balance later on but this rarely happens.
This will only buy you more time. The debt won’t suddenly disappear. Declaring bankruptcy should be your last option because it will remain in your credit reports for years.
Are you looking for someone to walk you through different pre-foreclosure options? Talk to We Buy Fast Houston Houses today!