How to Get Rid of a Home Before Foreclosure
Foreclosure wreaks havoc on your personal finances and credit score. It also causes a lot of stress in your daily life and can have negative effects on your marriage or relationships. Foreclosures typically take 3 to 4 months, sometimes much longer, depending on your state. So before your house is foreclosed on by the bank, take action to get rid of it to avoid the foreclosure altogether.
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Call your mortgage company to see if a mortgage modification or repayment program is available to you. Mortgage modification or repayment programs can help you avoid foreclosure altogether and keep your house, if that is what you would prefer to do.
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Contact a real estate agent about selling your house. The earlier you do this in the foreclosure process, the better chance you have of selling it before foreclosure. Choose an asking price that is attractive to buyers and is lower than other houses for sale in your neighborhood. This will entice them to buy your house instead of other houses for sale. However, try to find a price that allows you to make money or break even. If you sell your house for less than you owe, you still owe the bank money. Some people prefer foreclosure to losing tens of thousands of dollars on the sale of their homes.
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Consider renting out the house if you no longer can afford the payments. Take on a roommate or rent the entire house out to someone else. If you are just a few months behind on payments, this can help you continue to make mortgage payments and keep the house before the foreclosure process begins.
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Contact your mortgage company or real estate agent about a short sale. A short sale is an arrangement when you agree to sell your home for less than you owe, and the bank or lender agrees to forgive the difference, so when the house sells, you do not owe anything on it. You avoid foreclosure with a short sale, though you might lose equity you have in the house and your credit might still be damaged but not as severely as the damage from a foreclosure.
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Consider a deed in lieu of foreclosure. A deed in lieu of foreclosure is essentially an agreement you make to give the house back to the bank or lender, and the bank or lender cancels the rest of the loan and terminates any foreclosure procedures going forward. It is up to the lender whether you need to repay any past due balance you owe before the agreed upon deed.
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