“I’m behind in payments…will I be giving my house back to the bank in Baton Rouge?”
Nobody wants to lose their home, but it is an unfortunate reality for many Americans. Sometimes financial circumstances turn against you and your financial commitments become simply too much to manage. If your situation doesn’t change, banks interest charges and late fees start to add up and can force you into foreclosure (having to give your house back to the bank), leaving you temporarily without a home. There also are long term consequences including long term impacts on your credit, and a huge drop in your score. This is a big deal because it can make it harder to get a house or even a car in the future.
Nobody wants that. The bank doesn’t want your house, you obviously don’t want to lose it, and it is not an ideal outcome. However, right now with the CARES Act, you have more time than usual to get back on track.
Here’s a brief overview of the foreclosure process
The foreclosure process can vary depending on your lender and location, with government guaranteed loans being a little more lenient than private loans at the moment. Government loans are things like FHA and VA loans.
When you miss a couple mortgage payment, you usually will get your loan company’s attention. Usually they will start sending you letters letting you know you are late, then they escalate to warnings. After several months, if you don’t pay them back and get current on your mortgage, they can start the foreclosure process and eventually put your home up for auction!
Usually, if you miss a few mortgage payments, your loan company will start sending you notifications and then warnings. Over time, if you fail to pay back the mortgage payments you missed, the loan company may put your home up for public auction.
How long you can stay in your house after it is sold in auction depends on the state where you live. At some point, however, you will need to find a new place to stay.
Fortunately, you have options!
Don’t wait until your home is foreclosed. That destroys your credit rating and will make your life much more difficult for the next 5-10 years. One way to avoid this hit, although not necessarily the best way is to work out an arrangement with the loan company called a “deed in lieu of foreclosure”. Basically, you give the bank your house so they don’t have to spend tons of money and time putting you through foreclosure proceedings. You lose your house, but your credit rating will not have a foreclosure on it, which is very helpful.
Another option is to sell your house before it gets sold at auction. If you sell it for the amount you owe, or more, you will have no more penalties against you and your credit rating, and you can even walk away with some money. If you can’t sell it for the amount you owe, however, you would have to make up the difference.
Here’s an example of both: Let’s say you owed $100,000 on your home and you sold your home to us for $90,000. You would have to give that money to the loan company, along with $10,000 of your cash to make up the short-fall to pay your loan off. (If you contact a real estate attorney, you may be able to negotiate a deed in lieu of foreclosure deal in which the loan company agrees not to go after the difference in exchange for the deed to the house.) But if you owe $90,000 and sell your house to us for $100,000, you can pay off your loan and keep $10,000 in cash!
There is a third option as well, if your house is worth about the same amount that you owe. We can purchase your house “subject to” which means we would take over your mortgage and get you current. You would still be selling the house to us, but we would just make the payments instead of you, which would help your credit score instead of hurting it.
At BuyhousesBR, we’re professional real estate investors. Contact us today at (225) 288-7209 to find out what we can offer you for your house, especially if it needs repairs.
I want to avoid giving my house back to the bank in Baton Rouge!
Why do people choose to sell their home instead of going through foreclosure? (After all, they still don’t live in their home anymore.)
Losing a home can be difficult for any reason, but the impact on your financial situation and your credit is considerably less if you sell it before the end of the foreclosure process. In fact, going through foreclosure could impact your credit score by as much as 100 to 150 points. So the short-term challenge of selling your house is still a better choice than the long-term pain of giving your house back to the bank and wrecking your credit for years.