“I’m behind in payments…will I be giving my house back to the bank in Tampa?”
Nobody wants to lose their home, but sometimes financial circumstances turn against you. Those financial commitments become simply too much to manage.
If your situation progresses too far, you may be forced to give your house back to the bank in Tampa Florida, leaving you temporarily homeless. In addition, there may be long-term consequences, including a negative impact to your credit (and your ability to get a house in the future).
No one wants that. Fortunately, there is a strategy you can take today to help you proactively protect yourself and get back on track to financial stability.
How Fast is the Foreclosure Process?
The foreclosure process can vary depending on location and the type of mortgage you have.
Generally speaking, lenders will offer homeowners a few chances to catch up on their mortgage payments before initiating the foreclosure process. You are not the only one who doesn’t want to deal with foreclosure! It is costly and time-consuming for lenders, so they would rather give you the chance to catch up on your payments.
However, once the process begins, it’s scary how quickly you can be removed from your home. In many cases, the homeowner only gets 30 days to vacate the property before it goes up for auction. That’s not much time to avoid foreclosure, catch up on payments, or do anything else to protect your family.
What are My Options to Avoid Foreclosure?
Fortunately, you have a variety of options available to you if you want to avoid foreclosure. It can be a scary thing to experience, but if you’re proactive, you can find the solution that’s right for you.
In general, there are five ways to avoid foreclosure in Florida:
- Loan Modification
- Sell the House Before the Auction
- Reinstatement of the Loan
- Ask the Bank to Postpone Foreclosure
- File for Bankruptcy
Below is a brief description about each of these options and how it works.
Many lenders will allow borrowers to modify their loan to avoid foreclosure. This generally includes taking the past-due amount and adding it back to the principle on the mortgage. Some lenders will tack it on to the end of the loan, while others will disperse it throughout the remaining payments.
With a loan modification, it is likely that your monthly payments will go up. Be sure to ask your lender for a few different options before settling for one. Like we said earlier, lenders don’t want to go into foreclosure, so they will likely try to work with you if you ask for help.
Sell the House Before the Auction
When your home goes into foreclosure, you will be given an auction date. That date is the day that your house will be sold at an auction to another buyer. Once that happens, it will appear on your credit report, making it difficult to overcome.
You can avoid this by selling your house and closing on it BEFORE the auction. This is where cash home-buyers can be a really great partner for you. They can typically close in 7-10 days, giving you the opportunity to avoid foreclosure, avoid the credit hit, and walk away with some money in your pocket (hopefully)!
Reinstatement of the Loan
Another option to avoid foreclosure is to pay the reinstatement fees and get your mortgage back on track. This involves paying the past-due amount, along with any late fees or penalties. It can be really difficult to come up with enough money to do this, but it’s an option.
Another way that the loan can be reinstated before the foreclosure auction is through a real estate investor. You could work with a real estate investor who can close on your property under what is called a “subject-to” clause. This means that they can take over your mortgage, pay the fees, and have it reinstated.
If you find an investor or house-buying company who can do this, you can likely also negotiate additional terms with them. You could negotiate to stay in the house longer and pay a monthly rental fee. You could also negotiate for the investor to give you a portion of your equity in cash so you can go find a new place to live. Everything is negotiable, and we recommend asking lots of questions!
Ask the Bank to Postpone Foreclosure
Believe it or not, most lenders will be more than happy to do this. If you know you need to move out of your home because you just can’t pay the mortgage anymore, it’s smart to find someone who can purchase it. However, if you can’t close the deal before the auction date, you can ask for an extension.
To do this, you can negotiate with your buyer on sales price, dates, terms, etc. Have the buyer, realtor, or attorney draw up the purchase & sale agreement based on what you both have agreed upon. Ask the buyer to provide that contract, along with proof of funds for them to purchase your home. Give this documentation to your lender, and more often than not, they will accept it and allow you a little more time.
File for Bankruptcy
Disclaimer: we are NOT tax advisors or attorneys, so this is not meant to be finite advice.
The reason this could work is because you can file and stop the foreclosure before it happens. The filing will stop the bank from putting the property up for auction while you find a suitable buyer who can close on it. At this point, you can find a house-buying company or other investor to purchase the home in cash. Once they do, you can go back to the clerk’s office and “un-file”, or stop the bankruptcy. You can actually cancel the filing before it goes through!
This is a crazy trick, but we’ve seen it work, so it’s good food for thought.