Foreclosure is a process initiated by a mortgage lender when the borrower cannot make principal or interest payments on their loan. The process allows the lender to seize the property and attempt to sell it. The lender will try to recoup any losses and get the property off of their books. Facing foreclosure can be a daunting and emotionally draining process.
What are the reasons people face foreclosure?
There are many reasons that homeowners find themselves facing foreclosure.
Medical expenses and illness
Credit card debt
How long does the foreclosure process take?
The process depends on several factors. Typically it can take anywhere from 4 months to 1 year.
The lender can begin the foreclosure process after the borrower has fallen 90 days behind in payments. At this point, the lender will file a notice of default which will give the borrower and an additional 90 days before the lender files a notice of sale. After this notice is filed, the property usually goes up for auction in 21 days.
During this time, the borrower still has an opportunity to catch up on their payments and bring the loan within compliance.
What are your options?
1. File for Bankruptcy
Filing for either Chapter 7 or Chapter 13 bankruptcy will compel the court to issue an order called, the order of relief automatically. This includes the ‘automatic stay’ which directs creditors to cease collection activities immediately. Filing for Chapter 7 bankruptcy can postpone the house auction for up to four months. Filing for Chapter 13 bankruptcy can provide the homeowner to pay off the unpaid payments through a payment plan and stay in the home at the same time.
2. Let the foreclosure proceed
When a foreclosure occurs, it can affect more than just the borrower’s credit score. Depending on the homeowner’ current credit status, they may loose up to250 -300 points for their credit score. Those with better credit might take less of a hit and have a better path to rehabilitate their credit. Regardless, expensive and limited credit are the longterm consequences of foreclosure. Qualifying for a conventional loan might be next to impossible.
Many homeowners facing foreclosure don’t realize that there are tax implications associated with the process as well. Any time that debt is forgiven, it is considered a taxable event. This is because the borrower no longer has to repay the mortgage. The amount of income reported on the homeowner’s taxes is based on the difference between what the bank can sell the property for and what the property was originally worth.
Buying another house after foreclosure
After a homeowner forecloses, it is common that they desire to buy a future home and need to take out another mortgage. This is possible, but many lenders require a waiting period.
3. Sell your house fast with a home buying company
The best option for some homeowners is to sell to a cash home buyer like Nebraska Home Solutions. Selling your house fast before the foreclosure process can complete, will help you avoid the longterm consequences of bad credit and other tax implications.
At Nebraska Home Solutions, we strive to create a win-win solution for homeowners facing foreclosure. We understand that in the situation, your well being, and future ability to borrow and thrive, hang in the balance. If you’re dealing with the pressure of foreclosure and want to move on with your life, let us help. Fill out our online form or call us at (402) 704-8026 and let us take your home off of your hands, no strings attached.
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