According to the Federal Deposit Insurance Corporation, 1 out of every 200 homes will be foreclosed upon. This means that every three months, roughly 250,000 families face losing their home due to foreclosure.
So what is foreclosure, and how do so many people find themselves in this situation?
Foreclosure occurs when a homeowner fails to pay the monthly mortgage for a house in a timely manner. In a foreclosure, a homeowner forfeits all rights to their property unless they can pay off the outstanding debt. It’s important to understand that in this case, the homeowner really isn’t the owner. Because they still owe the bank money, they are actually considered a borrower. And since a mortgage is a secured loan in which the home is collateral against the money owed, a lender has the legal right to take possession of the house if the borrower defaults.
Typically, when a borrower fails to make mortgage payments, it’s due to a hardship such as divorce, medical expenses, unemployment, or a death in the family. After three to six months of missed mortgage payments, the lender serves the borrower with public notice of their default (sometimes called a lis pendens notice) and records the notice with the County Recorder’s Office. After this, the borrower enters into a period known as pre-foreclosure.
In pre-foreclosure, you still have a chance to catch up on your loan payments. During this time, you have a number of options, including trying to work with the lender or selling your house. If you are unable to find a solution within a specified time frame, the bank will issue a notice of sale, sometimes referred to as the notice of trustee. This notifies the borrower that the lender is going to sell the property. Once the property is sold at an auction or seized by the bank, you will be evicted.
Why do you want to avoid foreclosure?
Besides eviction and the hardship that comes with losing your house, foreclosure can have lasting implications on your financial health. For one, a foreclosure proceeding can cause your credit score to drop up to 280 points, which can take a good chunk of time to repair. Even if the foreclosure was an isolated incident on an otherwise good record, it can take years for your credit score to bounce back. In the months and years that follow, you will also face expensive and limited credit, making the road to recovery even more difficult.
To make matters worse, a foreclosure also has tax consequences. Tax law treats debt forgiveness as a type of financial benefit, meaning that you may be held liable for borrowed money that is not paid back. If the bank is unable to recoup the money that it initially lent, the borrower will likely have to report it on their income tax return unless the debts are dismissed through bankruptcy proceedings. On top of all this, you will also find it difficult to purchase another home after going through a foreclosure. It’s not impossible, but it will likely take more time. Most lenders have a post-foreclosure waiting period before they will even consider a loan application, which can range anywhere between two to seven years.
How can selling your house for cash help you avoid foreclosure?
Selling your house is an effective way to halt foreclosure proceedings by giving you the money you need to pay off the mortgage. Unfortunately, listing your home on the housing market with a real estate agent takes time— and that is something you just don’t have when facing foreclosure.
That’s where cash home buyers come in.
Selling directly to a cash home buyer is a simple process. After giving the buyer some information about your home, they will do a little research and make a no-obligation offer. Usually, you can expect to close the deal and have a check in hand within a week. You have the power to save your credit and future financial stability with just one call. Yes— it’s really that easy!
Of course, you don’t want to sell your home to just anybody. The middle of foreclosure proceedings is the last place you want to get scammed. It is important to ensure that you sell your house to a reputable buyer. At Houndstooth Cash Buyers, you will find a trustworthy team of professionals dedicated to helping you find a solution to your problems. We are your local Austin home buyers who will always pay you a fair and honest price when you need to sell your house for cash, fast.
Are you facing foreclosure and looking to sell your house fast? Let us help! Don’t hesitate to reach out to Houndstooth Cash Buyers today.