What To Expect When Facing A Foreclosure



Dealing with a foreclosure can be a daunting experience for someone who is in serious trouble with their mortgage. The entire process can be extremely scary, especially if you’re unsure of what to do. However, getting a Notice of Delinquency doesn’t mean you’re going to leave your home anytime soon. The first thing you should do is to have a better understanding of what foreclosure means.

So, continue reading this article to learn everything about foreclosure and what you should expect from the process.

Foreclosure: An Overview

Legally speaking, foreclosure refers to a process that lenders use when they’re going to take the property from their borrowers. It usually happens when the borrower is unable to pay their mortgage to the lender on time. When you fail to pay your mortgage, you’ve breached that obligation.

Consequently, the lender has the right to run after you by taking back your home and trying to recoup the investment. In short, once they have the ownership of the house, they’ll sell it on the market, and use the proceeds to repay your home loan.

Foreclosure: Things To Expect From This Process

Again, the foreclosure process can be a terrifying event that a homeowner can experience. The situation becomes more difficult when you don’t understand how foreclosure works. Your emotions are probably going to run so high that you can’t think of the best ways to face the process. That said, here’s what to expect when you’re dealing with a foreclosure:

  1. Foreclosure Process

The first thing that you should expect and at least know is the foreclosure process. Typically, the entire procedure can take several months to over two years. Just like other practices, the lender needs to comply with many steps so as not to prejudice the rights of the borrower. The foreclosure process includes the following:

  • Notice – Also known as pre-foreclosure, this stage involves the sending of a notice of default to the borrower. The document specifies the amount you have to pay and the due date to avoid foreclosure. In some cases, your house will be listed on the market in which buyers may have an opportunity to buy your home as a pre-foreclosure property before the actual process starts. 
  • Appearance In Court – Depending on the state you live in, you may be subjected to a court appearance together with the lender. This is commonly known as a judicial foreclosure. Here, the signing off of the judge on the foreclosure is needed before the lender can place your home for an auction sale.
  • Stopping The Foreclosure Process – Most states offer some kind of relief for homeowners to stop the process. The lender may provide you with a repayment plan, refinancing, or forbearance by which you’re allowed to stay in your home if you pay off a substantial portion of your missed loan payments.
  • Auction – If you’re unable to make payments, the lender will put your home for auction. If you resist vacating, the people who’ll purchase your property can throw you out.
  • Communication With The Lender

When facing foreclosure, expect that you’re going to communicate with your lender if you’re starting to have financial issues. As soon as you realize you’re finding it difficult to make mortgage payments, get in touch with your lender and see how you can negotiate with them. Inform them about your situation and discuss the possible options to avoid foreclosure.

  • Negative Impact On Your Credit Score

Expect that a foreclosure can give a negative mark on your credit score. The moment your credit score drops, you may have difficulty getting approval for all types of loans such as car loans, credit cards, and future mortgage loans. Moreover, the fees and other charges associated with foreclosure may put you in a further financial mishap, making recovery from a foreclosure more distressing. Remember, the decrease in your credit score may also depend upon several factors. It is, therefore, essential to be extra careful when you handle a foreclosure.

  • Understanding Of The Law On Foreclosure

Foreclosure is governed by laws. Expect that the process may vary from one state to another. Thus, no matter where you live, you must have a better understanding of your rights as a borrower and the time frame of the whole foreclosure proceedings. Check whether your state laws allow you to stay in your home during the redemption period after the auction sale.

Moreover, if you decide to work with a company to assist you with the foreclosure, educate yourself about the contract you’re signing, including the fees and other things involved. In foreclosure, some people will devise ways to gain from your misfortune. So, expect scammers to take advantage of your vulnerable situation. Given such circumstances, be careful when working with anyone during the whole foreclosure proceedings.

Conclusion

If you’re dealing with foreclosure, don’t hesitate to ask for valuable advice and guidance from a real estate attorney. Your lawyer may provide new options to help you stop the process. There are also plenty of companies on the market that can help you sell your home fast and get the most out of the sale before foreclosure occurs.

Hopefully, this article has helped outline the things you should be aware of during this difficult transition.