Why Avoid Foreclosure?
No one wants to deal with a foreclosure, of course, because no one wants to lose their home. But you also need to consider the credit and tax consequences that may haunt you for quite some time.
For instance, in the event of a foreclosure, the IRS considers this to be debt forgiveness, meaning if you still owed tens of thousands of dollars when a home was foreclosed on, this may be considered “income” by the IRS that can be taxable.
Foreclosures can also significantly lower your credit score and make it difficult to find housing going forward—even for rent.
What is the Best Way to Prevent Foreclosure?
If you want to keep your home, it’s important that you act as soon as possible once you realize you have a problem.
Steps to Take to Avoid Foreclosure
1. Face the problem head on.
If you fall behind on your mortgage payments, it’s important that you don’t ignore the problem. Keeping your house may still be a possibility if you act quickly.
2. Reach out to your lender.
Lenders want to work with you. They don’t want to take your house. They have options to assist people that may be having difficulties with making mortgage payments.
3. Open and promptly respond to all mail you receive from your lender.
Letters you receive from your lender will offer you solid information about ways to stop foreclosure. As time goes on, mail may include notices of pending legal action. Failing to open this mail will not be a valid excuse in foreclosure court.
Read your specific loan documents so you know exactly what will happen if you can’t make your payments. You’ll also want to learn about the specific time frames and foreclosure laws in your state as each state has different laws. (Here is the information for Georgia.)
Loans to Stop Foreclosure
If you’re wondering if there is a loan that you can quickly get to stop a foreclosure, the answer is yes. This is what’s known as a “foreclosure bailout loan.”
This is a refinance loan specifically for struggling homeowners to bring their home out of foreclosure. So essentially, the homeowner takes out a new mortgage in order to pay off the loan that is in default.
Reverse Mortgage
Another option for those who don’t qualify to refinance is to take out a reverse mortgage on the house to pay off the existing loan. This is available for people who are 62 and older, and it’s a loan based on their home equity.
The reverse mortgage will stop the foreclosure by paying off the current loan. But reverse mortgages have many downsides, often leading to foreclosures themselves, causing people to lose eligibility for Medicaid, and are accompanied with high fees.
Avoid Foreclosure by Selling Your House
There are two options for selling your house to avoid a foreclosure.
The first option is called a short sale. This is when a homeowner agrees to sell their house for less than the current balance of their mortgage.
The good news with this type of sale is that it allows the homeowner to walk away without a foreclosure on their record.
The second option is to sell the house to a home investor for cash. This is where Crawford Home Buyers comes in. When you fill out the contact form or give us a call, we will be in touch with you within 48 hours. Typically, we buy your house within 7 days.
This is often the best way to prevent a foreclosure from happening. There are, of course, tons of corporate guys you could go with. But we are small business owners, and we have a unique understanding of the homeowner’s struggles in the metro Atlanta area. We know how difficult it can be. Some of us have been there.
So what are you waiting for? We look forward to hearing from you!