I've been there. It's ugly. It's humiliating. It's frustrating. It's SO many things rolled into one.
You don't realize the very public implications of the prospect of losing your home until it's looming over your head. How will you explain it to your kids? your parents? your friends? your co-workers? Is there some intelligent response you can use that makes it sound like you sold at this time because it was a smart money decision?
And then, the ultimate embarrasment...the foreclosure notice shows up in the paper. Now what are you going to do? Your 'smart explanation' has been publicly exposed. You can't fake it now - everyone knows you're having financial problems. Is there some way this could have been avoided?
The answer in most cases is....YES! Believe it or not, the banks and other lenders DO NOT want to own your house! As a matter of fact, that's the last thing they want. It looks bad on their records and they aren't equipped to manage property all across the nation. If they take your house back, they just have to turn around and sell it, and their goal is to sell it as quickly as possible, many times taking a substantial loss just to get it off their books.
There are many reasons people end up in financial crisis. In my case it was partially medical bills, but mostly poor planning. I was fortunate enough to get my house sold before we reached the stage of 'notices in the paper', but trust me, I was looking EVERY week so I could be prepared with my 'excuse' speach.
While that was many years ago, the harsh reality that most Americans (myself included) are only a couple of paychecks away from being homeless became painfully clear to me this morning as I was reading through the foreclosure notices in the paper. I was almost in tears before I reached the end, as I saw several names I recognized and I know they're feeling the same pain and humiliation I felt in the past. I wish there was some way to help them now, but most have waited too late to seek help, as there is not enough time to take action before the foreclosure auction date.
And that is what prompted me to write this article. As a professional real estate agent who takes great pride in consulting the public on their real estate needs, it's clear that there's no greater need in today's market than some solid, empathetic advice on what to do if you can't keep up with your mortgage payments.
The best piece of advice I can possibly offer is to communicate. I know it's the last thing you want to do...it's the last thing you want to talk about. But, if you don't stay in constant communication with your lender, you leave them with no options but to proceed with trying to collect what's owed to them, by foreclosing on your home and selling it.
Now, if you're just a little late with a payment or there's no long-term reason you'll continue to be late, then you're not in the boat I'm talking about. I'm talking to those of you who are already late and don't see any hope of getting caught up, and will continue to miss future payments. Once you're 2 payments behind, you've either got to see a cash windfall in the future that will catch you up (maybe a tax return, etc) or sometimes the lender will divide the late payments up over the next few months (increasing your monthly payments during that time) until you're caught up. But it if you can't afford the increased payments and/or you don't have any cash headed your way, you need to be looking at what your escape options are.
This is the time to you need to seek the help of a real estate professional. Do NOT wait until you're already 3 or 4 months behind to think about selling. I can't stress enough, the importance of involving a REALTOR at an early date! Lenders tend to be a little more patient if they know you're taking action to resolve the situation. I'm not saying you have to list your house immediately, but what I am saying is that you need to know the facts.
You need to know what your home should reasonably sell for in the market you're in at that moment. Your agent should then prepare you an Estimated Proceeds sheet detailing your expenses to close and how much you could expect to walk away with (or have to bring to closing if you're upside-down). You should also ask about investors or Guaranteed Sale Plans that may be your safety net to a quick sale that will help you avoid foreclosure.
Once you know these facts, you should have a clear picture of what your options are. If you have enough equity to sell outright, then that's certainly the best approach in terms of salvaging your credit rating. If you don't have equity and can't bring money to the closing to pay off the balance, then your agent may be able to work with your lender to negotiate a 'short sale', which is where the lender agrees to accept less than the payoff amount in order to avoid foreclosure. If you've waited to the last minute, and the wolf is knocking at the door, then an investor may be your best hope. Of course, you won't get full market price for your house, but taking a little less is a far better option than losing everything to the bank and possibly still owing them a deficit.
(Did you know that you can usually get a home loan 2 years after bankruptcy if you keep your nose clean, but you have to wait 10 years after a foreclosure?)
The thing to know here is that a PROFESSIONAL real estate agent (just because you pass the test, it doesn't make you a professional!) isn't just in the business to make a commission. A PROFESSIONAL real estate agent is in the business of helping clients with their real estate needs. And if you're facing foreclosure, you definitely have a NEED. Seek the advice of someone you trust, who's been around long enough to know how to help in this situation. They can get you the facts you need and hopefully you'll make it through this tough time and not have to sell, or lose, your home. But, if you need to sell, and close this chapter of your life, they'll be there to make it happen for you.
Get REAL with your situation, EDUCATE yourself about your options, take ACTION today to SOLVE the problem. Don't put it off and think it will go away - you will only feel more and more pressure.
If you haven't had a peaceful night's sleep in a while, give us a call. We're here to help!
Julie Inman - The Home Gardners
Comments(2)