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Avoid These Top 7 Mistakes When Facing A Foreclosure

May 3, 2017

 If you're facing a foreclosure, the first thing you need to do is to take a deep breath. Really! When you're in the middle of a big problem that you don't know how to handle or how to solve it, one of the things you need to be able to do is to maintain your calm, for as hard as it may be. There's no point in getting anxious, angry, frustrated. At this point, you just need to deal with the situation the best way you can.


So, in order to help you, here are the top mistakes most people in your situation do. By looking at them and learning from them, you'll be able to avoid them and to make better calls.



#1: Ignoring Your Lenders:


No matter how embarrassing  it may be, you just can't avoid your lenders forever. The truth is that the problem won't go away because you ignore them. In some occasions, your lender may actually have a proposition or deal to offer you that allows you to save your home.



#2: Not Trying To Restructure Or Negotiate:


When you're dealing with a foreclosure, you may become hard on yourself and may lack some good sense. When you look at this from an outsider perspective, you'll understand that the lender doesn't have any interest in taking your home. And in case you think that just because you can't make your payments that foreclosure is your only option, you're wrong. When the lender takes your property, they will need to pay the taxes, the loss of payments, and keep up the property. So, a restructure is almost always possible, but your lender may not let you know that right away . And the only way to find out is to talk to your lender.



#3: Not Considering All The Options You Have:


When you know that you may need to face foreclosure, you need to know that you have options. One of the is restructuring your loan. However, you have others. You may decide that the best option for you is to declare Chapter 13 bankruptcy. When this happens, the foreclosure process stops and they will look at your financial situation and you might even be able to stay at your home since the court will restructure your payment plan accordingly.


#4: Damaging The Property:


We know and understand why you're mad. But unload your anger and frustration on your property may only turn things worse. Please notice that you may have serious legal consequences for doing this.


#5: Not Considering A Short Sale:


In a short sale, you will need to find a buyer for your home. The main advantage for the buyer that you find is that he will be able to buy it for less that what you owe to your lender. You still need to have the lender's approval but in case you do, you'll avoid the legal judgement against you because of the foreclosure and despite your credit score may be affected, it won't be as much as if you face foreclosure.


#6:   Work With An Investor to Sell Your Home


Foreclosure ruins your credit and your chances of owning another home anytime soon.  Also the home financing landscape is complex and there are a lot of hidden pitfalls.  If you want to really take your situation and turn it around, one smart way is to work with an investor.   An investor has access to the capital and the expertise you do not and will be able to make you a deal on your home, solve your financial problems and make you an offer that will satisfy your bottomline.  One thing to understand when working with an  investor, is that they can save you money on real estate agents, closing costs, escrow costs, repairs, and even buy from you as is.  So while their offer may be lower than the “retail” price, when you have to deduct all the costs involved including the realtor fees (6%), closing costs (1-3%), repairs, rehabs, financing costs, etc, their offer usually is the better offer.   To find an investor quickly we have found a portal that connects homesellers with expert investors in your area HERE: searches the landscape of home investors to connect you with the best option for you location and needs.  


#7:  Working with a Real Estate Agent


While everyone thinks that the way to sell your home is through a real estate agent, there is a lot of evidence to suggest that this may be the WORST option you have.  Many real estate agents do not fully understand home financing, and simply will get a very large commission (up to 6%, or $6,000 per $100,000) to simply put a sign on your front lawn and list the property on the MLS.  This process can take MONTHS or YEARS.  Make sure to consider all options before you simply hire a real estate agent, who in many instances can do more harm than good.


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