Foreclosure can mean the end of homeownership as you know it. But it’s not the end of the world. Even if the process has been initiated by your lender, it’s important to understand that you have options for avoiding foreclosure.
Selling your Alabama home is a major decision and it may be the best one you can make considering the circumstances. The worst decision you can make is doing nothing. Once you have received notice of default, it’s time to make things happen. The home is yours until the final hour and you can try to save it, rent it out or sell it. Weigh your options carefully and don’t hesitate. Taking action will be the first and most important step.
Here’s a look at some common approaches to selling a home in order to avoid foreclosure.
Foreclosure can be a long, drawn-out process, lasting months to year (or even longer) before the home is repossessed by the bank or sold at auction. After that, the consequences of foreclosure will haunt you for years to come.
Remember that the home is yours until the final hour. You can try to save it, rent it out or sell it. Your mortgage lender will play a big role no matter what you decide to do. In most cases, your lender will be your greatest ally. Forgive them for starting the foreclosure process in the first place (they’re just trying to recover what you owe them, anyway) and start cooperating with them. Discuss your situation and don’t be afraid to ask for advice.
Is it possible to modify the terms of your loan? Are you eligible for a reduced interest rate? What forbearance programs are available to you? Especially if you’re trying to keep the home there may be solutions worth inquiring about.
If you choose to sell, your mortgage lender must approve the sale. (All the more reason to have them on your side.) For a short sale the lender will be involved in setting a price, negotiating offers and agreeing to the final sale.
A short sale means selling a home for less than what you owe on it. A lender will generally approve the process based on three determinations: the current market value cannot possibly satisfy your debt, you can prove significant financial hardship, and you can claim insolvency.
Is it true that a short sale is better than foreclosure? Usually, the answer is yes. A record of foreclosure can make it difficult to obtain a new mortgage loan for seven years. After a short sale, it may be possible to bounce back in two to four years, giving you ample time to reestablish your credit and qualify for conventional loans. That being said, a short sale may put you in a slightly better position for the future but you’re still walking away with absolutely nothing.
Rent It Out
Many homeowners decide to rent their homes in their effort to avoid foreclosure. Collecting monthly rent might float you for awhile if you’re confident about turning things around. Maybe your struggles are temporary and you plan to come up with the money to settle the debt thereby stopping foreclosure. Or, you are fortunate to have a place to stay in the meantime. Otherwise, don’t forget to calculate costs for hotels or short-term housing.
Also keep in mind that renting or leasing a home requires that it is in good condition. The expenses for cleaning and repairs should be considered before deciding on this option.
Sell For Cash
Selling to cash buyers is always an option especially if you don’t have anymore time to waste. A professional cash buyer can make a quick offer during the foreclosure process. If you and your lender agree to the offer, the whole deal can be done within weeks or days. An alternative to listing and selling through a real estate agent, selling to investors frees you from dealing with unpredictable homebuyers and the challenges of the conventional market. It also spares you time and money otherwise spent on inspections, repairs, staging and agent fees and commissions.
Lenders like working with cash buyers because there’s a guaranteed, fast cash offer on the table. Foreclosure is costly for everyone involved, including the bank.
If you are facing foreclosure and need help selling your Alabama home, let’s talk! We work with homeowners in need of FAST solutions to tough real estate problems. We can make a fair offers for any property near Birmingham! Contact Home Deals Alabama today to discuss your options.