October 10, 2024
Are you behind on your mortgage? If yes, you might be wondering about what to do next to avoid foreclosure of your San Antonio house. Cash Or List Now can help with these pointers!
Reinstate The Loan – By Far The Best Option
The First step in getting out of default and avoiding foreclosure is paying the late payments and fees back. Bar none, that is this easiest and best way to avoiding foreclosure. The problem is that that is not always a feasible task, so then you have to ask yourself, ‘ do I have a family member/ friend or a 401k that can lend me the money?’. Bottom line, the bank does not care how they get paid, just as long as they GET PAID. If you can reinstate the loan, you don’t need us!
A loan modification is where the bank takes the late payments and put them on the back end of your original loan and rework the terms of the loan. When folks trying to avoid foreclosure decide that this is the route for them, they quickly find out that:
- There is an approval process that they have to undergo and qualify for – not everyone gets approved, and it takes valuable time that they may not have.
- Interest rates and payments will be higher going forward because of the new terms of the loan.
If this is the route that you decide to go, you have to ask yourself one very important question ‘What in my circumstances has changed that will make this option viable?’. What I mean by that is after not being able to pay your original mortgage price, will you be able to afford the more expensive price after the new terms are established. A lot of times people that get loan modifications find out that they cannot pay the more expensive payments and wind up farther back than they originally started because now they owe even more money.
When time is of the essence, this is the quickest and most reliable way to avoiding foreclosure on your San Antonio home. Typically, there are no realtor fees, and a cash buyer will not ask for repairs and will cover the seller’s closing costs for them. I understand no one wants to move or leave their home but stopping a foreclosure with cash in your pocket and a fresh start sounds a heck of a lot better than not being able to buy or rent another house, car or get a loan for the next 10 years because your credit is decimated.
A non-qualified assumption is a fancy way of saying that a cash buyer will bring your loan current and save your credit and help you avoiding foreclosure. This entails the cash buyer to take ownership of the house while keeping the original loan in place and in your name. On top of the payments being brought to current, the seller is also given cold hard cash in their pocket. Why someone would choose this option:
- With the loan still in your name, the delinquent payments will be brought up to current and help save your credit. Future payments will also be going on your credit report.
- Depending on the buyer, the seller can potentially remain in the house as a tenant. This varies from buyer to buyer.
- Depending on the buyer, the seller can partner on the deal where the buyer puts money into the house to sell for market value and split the profits to maximize the amount of money to the original seller and the buyer.
This is a great option to avoiding foreclosure IF you have the time. Where this becomes a questionable option is you have to find a qualified buyer in time! In Texas, it typically takes approximately 30 days to close on a traditional home sale ONCE the buyer has been found. In the meantime, the seller has to worry about getting the home market ready for showings and potentially dealing with the buyer wanting repairs and asking for closing costs concessions on top of realtor fees. Depending on how far behind on mortgage payments the seller is, this may not be an ideal situation.
Short Sale
A short sale occurs when the lender agrees to sell the house for less than what is currently owed on it. This happens if a home is purchased at a high price, only to lose value over time. If the owner gets behind on payments, they might find themselves in a place where they owe more than the home is worth. Lenders will often agree to a short sale when they see this as a means of recouping most of their costs, while not having to deal with the foreclosure process. When a sale amount is agreed upon with the lender and a buyer comes through, the mortgage lender will consider the loan paid in full.
Bankruptcy – 2nd Worst Option
Bankruptcy is the equivalent of putting a band-aid on an infected wound. Folks have the misconception that this stops foreclosure, but I am here to tell you that it does not. It merely postpones it for 30-60 days maybe. In the grand scheme of things, this option will crush your credit for 7 years preventing you from buying or renting anything for the duration.
- Late payments (arears) will continue to get higher along with late fees and lawyer fees.
- A loan modification will be harder to get approved for.
- Bankruptcy costs money. If you are unable to pay your mortgage, will you realistically be able to pay a couple thousand dollars for a lawyer to help you file for bankruptcy?
- If you decide to ultimately sell, you will get less money because the late payments and fees have accrued higher than before, and your credit will be shot.
Foreclosure – Absolute Worst Outcome
As stated before, your credit will absolutely be decimated for 10 years. PLEASE DO NOT LET IT COME TO THIS. everyone needs help from time to time, and that’s ok.
Conclusion
Folks that want to avoid foreclosure on their San Antonio home have options. Call Cash Or List Now today at 210-816-2486 and we will listen to what you have going on and will help advise them on the next course of action to help them come out clean on the other side. Before I leave you, all I ask is that if you have questions, please call us, don’t be too proud or put your head in the sand. You can have a fresh start. Take care and God Bless.