Facing Foreclosure? Here Are Your 8 Options
Are you getting constant calls from your mortgage holder because you are behind on your payments? Even if they have filed the lis pendens you still have options.
Banks aren’t in the house selling market, they’d rather have a performing asset than have to deal with trying to sell your house. This isn’t always the case and that’s where we come in.
This article breaks down the eight options you have if you are facing foreclosure.
1. Personal Loan– Getting a loan from a friend or family member to pay off the amount owed to the bank.
2. List with an Agent– The best way, in general, to get the most money for your house. If you can wait for the right buyer and the property is in a condition where they can get a bank loan this is typically the option that makes the most sense
3. Renovate/ List– Banks won’t give someone a loan on a “distressed” property so by fixing it up and listing it, you are again maximizing the profit you can make on your home. The downside is fairly obvious but it takes money and time for renovation on top of the time to sell
4. Loan Modification – Work with the bank to adjust the terms of your mortgage to keep your house. Banks don’t want nonperforming assets on their book so could be an option.
5. Sell it for Cash – The fastest and easiest way to get cash for your property. A cash close means no fees, no waiting, and no headaches. The downside is you’re not getting as much as some of the other options, which is the tradeoff for ease and speed.
6. Rental – Keep the property as a rental to gain cash flow to pay off the amount owed. Takes time to find a renter, have to be a landlord and find a different primary residence
7. Subject To/ Seller Financing – Have a buyer take over mortgage payments while the deed stays in your name. Typically involves cash paid to you at signing while getting paid X a month for the agreed-upon term. This can be a great option but can be considered a grey area since most mortgages have a “due on sale” clause, where the bank could call the mortgage due. Also, this has come under more scrutiny since the 2008 housing crash and can be considered predatory practices in some cases.
8. Bankruptcy – There are two different chapters of bankruptcy- one where creditors can’t pursue you and the other that protects your property while you negotiate how to pay off your debt. Stays on your record for seven years and severely affects your credit but can get people out from under a mountain of debt.
If you are facing foreclosure then the best option is to see an attorney and see if they can work something out with your mortgage holder. It is important to know all your options and make the one that is best for you and those closest to you.