Chances are no one goes into home buying imagining that he or she will file for foreclosure. However, in the U.S. 1 in every 1,346 homes go into foreclosure. If you find yourself in this situation, the first bit of advice is not to panic: There are ways to get through it when armed with the right information.Before you opt to foreclose, you may want to explore other alternatives. For one, you can consider a short sale.
What is a Short Sale?
Simply put, a short sale is when you sell your home for less than what you owe the mortgage company. A short sale can be a good deal for buyers and it can help you avoid having a damaging foreclosure on your credit record. Unfortunately, short sales can also move slowly and often fall through. That's because everyone who is owed money must agree to take less -- or possibly no money at all. If you decide to go the short sale route, here are some important tips to help keep the deal on track and to help sell your home more quickly.
1. Hire a home inspector to give the place a thorough evaluation. At about $400, it’s well worth the price2 — especially if a major structural issue or another pricey problem is discovered.
2. Scope out the neighborhood. Take a look around and even visit some estate sales to get a clear idea of the “average” home in the neighborhood. And, remember, you want to avoid upgrading beyond the local standard, while making sure your home measures up to the ones surrounding it.
3. Focus on the kitchen and the bathroom. Make it your mission to upgrade those two most-frequented rooms that buyers look at and use most. For starters, a fresh coat of paint in a color that brightens the mood can do wonders for the ambiance. You can also look into "upcycling," which is taking something that’s already used and turning it into something new, attractive and useful. The options are endless so use your imagination!
4. Out with the outdated. It’s only fair that the buyers expect the homes to have mechanical and electrical systems — heating/air conditioning unit, water heater, wiring and plumbing — that are in good working order and reliable. Check out this article to make sure you’ve got systems that are in good shape.
5.Look below to raise the value. We all (hopefully) know that what’s on the inside matters just as much as the outside. Go ahead and give walls and trim a fresh coat of paint and even refinish hardwood flooring that may be hidden under unattractive carpet and laminate.
Small and steady wins the race.Don’t underestimate the effect of inexpensive cosmetic improvements (think doorknobs, toilet seats and faucets). Not just the loftier goals like adding a new room get positive attention from potential buyers.
Learn other ways to prep your home for resale to sell as quickly as possible.
If you’ve done the research and are going to foreclose after all, just know that information is your friend… and we’ll help you get started in the right direction. Read on:
First Of All, What Exactly Is Foreclosure?
Foreclosure is a situation in which a homeowner is unable to make full principal and interest payments on his/her mortgage, which allows the lender to seize the property, evict the homeowner and sell the home, as stipulated in the mortgage contract. One month after the homeowner misses a mortgage payment, he/she is in default and will be notified by the lender. Three to six months after the homeowner misses a mortgage payment, assuming the mortgage is still delinquent and the homeowner has not made up the missed payments within a specified grace period, the lender will begin to foreclose. The farther behind the borrower falls, the more difficult it becomes to catch up, since lenders add fees for payments that are 10 to 15 days late.
There are 2 Types Of Foreclosures:
The main types of foreclosures are “judicial foreclosures” and “non-judicial foreclosures”. Here’s the lowdown on each of these:
1. Judicial foreclosures take place when the lender files a civil lawsuit against the borrower and the whole process is handled by the court. Within this type, there are two subtypes:
• Foreclosure by sale requires that the home is auctioned to the highest bidder with the lender placing the first bid.
• Strict foreclosure occurs when the court sets a date by which the owner must pay the mortgage. If the owner fails to do this, the court awards ownership of the home to the lender and no auction takes place.
2. Non-judicial foreclosures allow the lender to advertise and sell the property at a public auction, without court involvement. This is a process that is specified by the state and is closely followed.
A Note About Warranties And Foreclosed Homes
A home warranty has nothing to do with the fact that a home is about to go through the foreclosure process. On the other side of it, if you purchased a foreclosed home, it could have a new home warranty still in tact. Check to make sure, either way.
And Last But Not Least, Coping With A Foreclosure
If you ultimately do foreclose, here are some ways to make the best of this potentially emotional situation:
• Lean On Your LawyerForeclosure law could very well be the fastest-growing profession in the country. Shop around and find a lawyer you really click with and who is in your budget. He or she is out there.
• Leave Self-Blame At The DoorWhether you misunderstood your mortgage or it was just bad timing, it’s not doing any good to beat yourself up. It happened. You’re not the only one. And now you’re taking steps to make things better.
• Focus On Your Finances
Now is the time to look for ways to save on all your bills and get your “financial house” in order. It’s hard work. It’s stressful. But with a few tips and tricks from the experts under your belt, you’ll see that there are in fact ways to keep your home up and running, and keep your budget in tact at the same time.
• Move Onward And UpwardThe decision has been made — now it’s basically in the hands of your lawyers. Start trying to focus on things you can control (like getting your finances to a healthier place) and leave the other details to them.