Homeowner Resources

Options to avoid Foreclosure

Foreclosure sign Struggling to make a payment on your property? Foreclosure is not your only option! There are many ways to avoid foreclosure on your property. Allow me to be your guide to avoiding foreclosure in the greater Tupelo area.

As a Certified Distressed Property Expert and Realtor in Tupelo, Mississippi, I have the expertise to help you through this process. Contact me at 662-678-3248 to discuss your options so we can come up with a plan to achieve the best results for you.

What's a Foreclosure?

A foreclosure is the process of losing your home due to payments not being made. This is an extreme measure taken by the lender to attempt and stem or recover their lost investment. Not only is it extremely costly to the lender, in some cases the costs of the process are also passed on to the homeowner. In addition to being a big financial loss, it can also damage your credit score.

Add to those factors the emotional toll that it can take on you and your family and it's pretty clear that you'll want to do whatever you can to avoid losing your home to foreclosure. Financial hardships happen. They're simply a part of life. When they occur and you fall behind on your mortgage, you need to know your options.

Here's an in-depth breakdown of what a foreclosure is:

Foreclosure is a legal process that lenders trigger to gain title to a home that was used as collateral for the mortgage loan that is now in default. It terminates all the homeowner's rights covered by a mortgage and makes the lender the absolute owner.

losing your home

The lender may also file a Lis Pendens, which is a notice that begins the foreclosure process. If this is filed, the homeowner is required to appear in court to answer the charges. The homeowner may ask for an extension, which may or may not be granted. If there no extension granted the last phase of the foreclosure process starts: the auction phase.

The foreclosing trustee records and prepares the notice of foreclosure. The notice details the legal description of the property being foreclosed upon and gives the place, time, and date of the pending trustee sale. A foreclosure is complete when the lender obtains the property's title, the Sheriff or Trustee's deed is recorded and status code 46 is reported to the Single Family Default Monitoring System.

The entire foreclosure process may take more than 120 days from the first missed payment until the completion of the foreclosure. Acting quickly is the best remedy against this drastic legal remedy.

Effects of a foreclosure

It can reduce your credit score significantly and remain on your credit report for 10 years or longer.
It can affect your ability to get approved for new credit to purchase a car, receive student loans, or rent an apartment.
It can affect future employment opportunities

Alternatives to Foreclosure

Re-instatement

One way to stop a foreclosure is to reinstate the loan, which means paying off the delinquent loan in one payment. To do this, you request a reinstatement quote from the lender. This includes the amount of money that needs to be paid to fix the defaulted loan. Once it's paid for, you can resume normal monthly payments on your debt.

Forbearance or Repayment Plan

If you're suffering from a temporary financial crisis, you may be able to request that your debt be reduced or suspended for an agreed-upon amount of time. However, once your forbearance time is up you will be required to pay the past-due amount.

Refinance

This is a popular option among homeowners because it allows you to stay in your current home and replace your old loan with a more affordable one. Refinancing your mortgage will have a minimal impact on your credit score.

Rent

You can potentially avoid a foreclosure by renting out your property to tenants. The goal is to make enough money from rent payments to pay off the payments you've missed on the delinquent loan.

Mortgage Modification

A modification involves changing the terms of your loan agreement with your lender. This can lower your interest rate, extend the time frame of the loan, or reduce the principal amount.

Service Members Civil Relief Act (SCRA)

If you're a service member of the United States military, you have additional options for avoiding a foreclosure. One option is the SCRA, which states that if you took out a mortgage before entering active-duty, a foreclosure is not valid if it's made after your period of military service began. Also, if your mortgage was taken out after you began active-duty, you generally cannot be foreclosed against.

Deed in Lieu of Foreclosure

Also known as a mortgage release, if you're facing a foreclosure this is a deed instrument in which you transport all interest in the property to the lender to satisfy the loan. It releases you from the majority of the debt and has less of an impact on your credit score that a foreclosure.

Bankruptcy

In short, when you declare bankruptcy on a home you are giving the lender the home. While this may be a more appealing option than foreclosure, a bankruptcy may affect your credit score more and it stays on your credit report for as long as 10 years.

Short Sale

A short sale is one of the best options for avoiding a foreclosure. It involves selling the home for less than the balance remaining on the mortgage. You can use the proceeds from a short sale to pay off most of the remaining mortgage balance, and it will not affect your credit score as harshly as a foreclosure or bankruptcy.

A short sale is very similar to a normal home sale. To get the best results, you should enlist the help of a real estate agent with short sale and foreclosure experience. Your agent would then work closely with the lender to ensure the price is set correctly, all financial information is properly collected, and that all parties involved agree with the terms of the sale.

Have the Right Team by Your Side

Never go through a foreclosure or short sale alone! Seek experienced and reputable representation to ensure your rights are always protected. At GumTree Realty, we are always here to help you navigate such a challenging process. Call us at 662-678-3248 to learn more.

Interested in purchasing a short sale or foreclosed home?

GumTree Realty can guide you through the process of purchasing a short sale or foreclosed home and help you find a property that fits your needs. Contact us at 662-678-3248 to learn more.