Going through a foreclosure can be a nightmare for any American family. Unfortunately, it is becoming more common for families in this country to experience this.
In 2022, foreclosures were up by 153% in the United States compared to the same period in 2021.
If you are someone facing this situation, avoiding foreclosure is most likely the first thing that you are thinking of. However, this can be a daunting task for those who are not familiar with the process.
Luckily for you, there is a solution where you can avoid foreclosure. One of the best ways to do this is by selling a home.
How does this prevent your house from being one of the many foreclosed homes in this country? What steps do you have to take to make sure that this route is successful for you?
This is your guide on how to avoid foreclosure.
Before we can go into what options you have to sell your home before foreclosure, you must be fully aware of what this means. Foreclosure simply means that the lender wants to collect the money that a homeowner owes them by selling their house at an auction.
However, the foreclosure does not go through right away. There are several steps, including a written letter that will let a homeowner know that this process has started.
Think of this as a written warning that needs a response right away. Your lender is saying that if you do not pay the money that you owe them within a set amount of time, they will foreclose your home and put it up for sale at an auction.
However, just because your home has not been foreclosed at this time does not mean that you should take this situation lightly. It still requires you to act because if you do not take action yourself, legal action will be taken. The sheriff will have the legal authority to evict you from your own home.
So, what you need to do in this situation is know your rights and know how long you have to work. In Texas, there are usually three stages to a foreclosure process, plus a period lenders must wait before they can start this process.
In Texas, most major lenders need to wait 120 days before they can begin a formal foreclosure process. This means that a homeowner needs to be at least four months behind on their payments before a lender can consider taking action to evict a homeowner from their own home.
Once this period ends, a lender can take the first step of the foreclosure process.
Notice of Default
This is a written letter that a lender is legally required to send to a homeowner when the 120-day period described above is over. The letter details how much a homeowner is behind on their payments and how much money they owe the lender.
From there, a homeowner has 20 days to come up with the money that they owe a lender. If they fail to do so after 20 days, a lender is allowed to move on to the second stage of the foreclosure process.
Notice of Sale
Once the default period is over, a homeowner has to get a written Notice of Sale. This lets a homeowner know that their home is being listed up for auction on a certain date.
That date must be at least 21 days away from the time the notice is mailed. Note the distinction here because there can be a big difference between the day a notice is mailed versus the day a homeowner receives this notice.
For example, let’s say that the home is scheduled for auction on July 22nd. A lender complies with the legal requirement of a Notice of Sale by mailing this to a homeowner on July 1st.
However, a homeowner may not receive the notice until July 3rd by mail. This still fulfills the legal period that a lender has to notify a homeowner, so it could put the homeowner in a potentially more difficult situation to try to come up with the money before an auction takes place.
Finally, a homeowner that wishes to retain their home or get the proceeds from a home sale themselves must avoid getting to this stage. That is because this is the stage where the auction for your home takes place.
In Texas, once someone wins a bid on a home in a foreclosure auction, the previous homeowner loses the legal right to keep the home. After that, they will typically be given three days’ notice to vacate the property when the new homeowner is ready to move in.
Remember, just because the foreclosure process may have started on you does not mean that you have no power to sell it yourself. Texas law allows you to sell your home yourself until the day your home is in a foreclosure auction.
With the timeline described above, that should give you about 41 days to come up with a game plan on how you will go about this.
The biggest thing that you have to keep in mind is that you have limited time to do this. You may not be able to wait for the best offer or have the time to fix minor issues that a potential buyer may have with your home. With all of this in mind, make sure you fully understand that before going ahead with this.
Pros of Selling Your Home
The main benefit of selling a home is that you will have much more say over how much money your house gets sold for. You can decide what offer you will accept and you can try to get an offer closer to the money that you owe your lender.
In 2022, the average home in Texas was worth just under $315,000. If your home is around that price range and that is about the money you owe a home lender, then you can raise the money yourself and get out of debt with your lender right away.
However, if you choose not to go this route and do not collect the funds to save your home, there is the risk of the home going into foreclosure.
Knowing Your Type of Home Loan
It can be crucial to know what type of home loan that you have. The reason for this is that if you have this information, that can potentially give you more time to sell your home.
An example is if you have a home equity loan. In this situation, a judge may need to give a court order before any type of foreclosure process is approved. If that happens, that can buy you time to start preparing your home for sale or make the proper arrangements.
Another example is if you have a VHA loan. If you have this type of loan, there is typically a longer grace period in the foreclosure process compared to a normal loan.
So, make sure you check what type of loan you have to know what you are up against.
Selling Your Home As-Is
Finally, you may run into a situation as a homeowner where you have serious repairs to make before a typical buyer may be interested in your home. The problem is that if your home is in the foreclosure process, you likely will not have time to make these repairs before the home reaches auction.
So, what can you do? Your solution here is to find a buyer that will buy your home as-is. What this means is that a buyer is willing to either do the repairs themselves or live with whatever setbacks your home has.
The main catch with this option is that you obviously will not get the money you would for a home that is ready to move in. However, the big pro with this option is that it is by far the fastest way to sell a home. If you like the idea of selling a home quickly, this option is your best bet.
Sell Your Home
These are the main things that you need to know about avoiding foreclosure by selling your home.
Remember, just because you are in the foreclosure process does not mean that you stop trying to collect the funds yourself. One of the best ways you can do that is by selling your home.
Do you need an offer quickly on your home? See what we can offer you today.