How to Avoid a Foreclosure in Texas
How to Avoid a Foreclosure in Texas
Nationally forecasters are predicting that 2010 and 2011 are going to be even worse than 2009. According to NAR (National Association of Reatlors), almost 1/3 of all pre-owned homes sold in 2009 were either short sales or foreclosures. The Dallas Morning News reports that more than 1 in 10 homeowners in Texas are behind on their mortgages.
Why? I thought we were almost through the worst part? Perhaps you are asking yourself the same questions I have been asking myself. I found some common ingredients that have been leading us down this path.
- Unemployment - No job = no income. No income means you can't pay the bills.
- Predatory Lending - Remember those ARM's (Adjustable Rate Mortgage) that were so popular 4 & 5 years ago? Well, those are currently expiring and the interest rates will rise. Many, if not most, homeowners will not be able to afford their new mortgage payment.
- Distended Debt - Did you know when most find themselves in more debt than they can handle, they actually pay their credit cards before they pay for their utilities and mortgage?
- Increase in Home Inventory - With the Spring Market on the way - the banks are trying to sell the homes they have taken back and this coupled with the normal home owners who are planning on moving - means more than the normal 6 month supply of inventory. More homes mean more competition and with fewer buyers.
Sound challenging? If you up to your eye balls in debt, currently facing unemployment, have an ARM that is about to expire or need to sell your home and can't get out of it what you have in it - what are you to do?
Don't stick you head in the sand and hope no one notices. You need to act fast because you do have options and a foreclosure is usually the worst option of them all.
First, you will need to speak with your mortgage company to see if they can help you to either restructure your loan (so that you can afford your payments), work out a repayment plan with your lender, perhaps borrow some money to get current on your payments or possibly refinance your loan with better rates and terms.
If this seems overwhelming, ask a Realtor like myself who has experience helping home owners like you who are facing the same hardships. If you have tried the above options and have come up short then you need to discuss the other options available to you with a qualified Realtor.
Your options here could include (depending on which state you live in as the option vary from state to state)
- Rent your home out for the short term while you get back on your feet
- Sell your home
- Enter into a Deed in Lieu of Foreclosure
- File for bankruptcy protection which could help delay the foreclosure process
- Sell your home by way of a short sale.
Trust me this is not a time to be prideful. Heck, I am a Realtor and even I have had to sell one of my homes as a short sale. My wife and I had a home in Chicago that we bought but my sister was diagnosed with cancer and we made a sudden move back to Dallas. Our home sale in Chicago lost over $130,000 in less than two years. We had to go to the bank and ask them for a short sale. It was not an easy process but we worked hard and they allowed us to sell our home for considerably less than we owed them and therefore we were able to pick up the pieces and start rebuilding. They were able to make more than they would have in a Foreclosure and they also avoided all of the legal fees associated with the foreclosure transaction.
Here are 8 Strategies to Avoid Foreclosure:
- Be proactive about the problem address warning signs when they first appear.
- Contact your lender as soon as you become aware that you might have a problem.
- Read your mail. Not knowing does not solve the problem it just delays the final result and increases the pain and stress of the situation.
- Contact a HUD approved housing counselor.
- Prioritize your spending. Pay your house payment and health insurance first!
- Look for additional ways to generate cash.
- Don't fall prey to scam artists like a private "foreclosure prevention specialist;" instead go to www.HUD.gov to obtain valid information about foreclosure prevention.
- Make an appointment with a REALTOR® to discuss the problem and get advice.
A foreclosure is a serious matter and contrary to popular belief when your home goes into foreclosure this does not mean that you walk away from the home "scot free". There are only a few states that are "non-recourse" meaning the lender can't come after you for the difference between what you owe and what they actually sell it for. Most of the time you will be responsible for the difference which most people don't find out until a year or so later when they get a letter in the mail from the lawyer saying the mortgage company has come calling.
Life Happens...Make educated decisions about your future and seek the help you need.
If you would like a copy of the "Making Home Affordable" brochure which is a program enacted by our government that offers two different potential solutions for borrowers who need help with their current loans then you can email or call me and I will be happy to send it you.
5013 W. Plano Pkwy Suite #100
Plano, TX 75093