Owning a home is a dream for countless Americans. But as the costs of both living and housing continue to rise, it’s clear that this dream isn’t always an attainable one. Even if you were able to purchase a home at one time, that doesn’t mean you’ll be able to keep up with mortgage payments for the next 20 or 30 years.
Tragically, financial difficulties and major life changes can make a homeowner unable to afford their home. And in many situations, foreclosure may feel inevitable. After all, there were just under 300,000 properties throughout the U.S. with foreclosure filings during the first half of 2019.
But what you might not realize is that foreclosure can often be prevented or stopped. In order to do that, you’ll need to understand exactly what causes it to occur and the steps you should consider to make sure a foreclosure filing doesn’t have a negative impact on your life.
What Causes Foreclosure?
Foreclosure is the legal process through which a lender aims to recover money lost on a defaulted loan (like a mortgage) by taking ownership of a property. This is a right that the lender retains due to language outlined in a mortgage document, which allows the lender to use a given property as collateral if the borrower doesn’t uphold the terms of their mortgage (e.g., making monthly payments). Although the exact process varies somewhat based on location, Pennsylvania is what’s known as a judicial foreclosure state, meaning that foreclosure cases are brought and resolved through the court system.
Delinquent payments might trigger a foreclosure claim filing, but there are a number of possible root causes behind foreclosures. Some of the most common causes of foreclosure include…
- Medical bills
- Credit card debt
- Divorce or death (resulting in financial hardship)
- Job loss or demotion
- Misprioritization of bills or debts
- Ownership of multiple properties
- Tenant loss (vacancies or evictions)
- Large home maintenance expenses
Certainly, the reasons for foreclosure are not limited to this list. Virtually anything that results in financial difficulty can be an underlying cause. It’s important to identify there these hardships originate in order to get a handle on your economic challenges and prevent the possibility of foreclosure or bankruptcy.
How Can You Stop Foreclosure?
It might surprise you to learn that foreclosure can be avoided. In some cases, the foreclosure process can be stopped even after the wheels are already in motion. If you find yourself in a position of financial hardship, you’ll want to familiarize yourself with these tactics and explore the options that will fit your needs.
For one thing, you should talk to your lender as soon as possible. Usually, the borrower will receive a couple of warnings or demand letters before any foreclosure action is taken by the lender. It’s in your lender’s best interest to work with you to pay back what you owe, which means that foreclosure filings are their last resort. If you’re able to discuss your situation with your lender after your first missed mortgage payment, you may be able to work out a solution that will allow you to keep your home.
It’s possible that filing for bankruptcy might provide a solution for you. That’s because as soon as you file for bankruptcy, federal law prevents lenders from trying to collect on their debts. However, filing for bankruptcy may only serve to buy you some time to fix your finances. While creditors and mortgage lenders have to work with the borrower to come up with a repayment plan, bankruptcy won’t erase your debts — and it will impact your credit score for years to come, making it much harder for you to secure housing in the future. You should always consult with a lawyer before moving forward with a bankruptcy claim.
One of the best ways to stop foreclosure is to find house buyers who wish to purchase the property. Although a lender may plan to put a home up for auction after taking ownership, the lender actually has to consider any offer you receive on the home. That means you could potentially pursue what’s known as a short sale, which occurs with permission from the lender. With a short sale, the lender agrees to accept a mortgage payoff that’s technically less than what’s owed. Short sales usually occur when the homeowner has negative equity, meaning that the property’s value has declined and is worth less than what the borrower owes on their mortgage.
However, you can also work with home investors to sell your property. Cash house buyers specialize in quick property sales that allow the borrower to pay off their debts and start a new chapter without dealing with foreclosure or short sales (both of which can impact your credit score). House buyers can provide an easy, fast, and fair solution for homeowners burdened with financial concerns and make it so the lender won’t need to file a foreclosure claim in court.
As cash house buyers, we buy houses in need of major repairs. We also work with you to determine a closing date, meaning you won’t have to wait for your home to sell on the real estate market. By working with house buyers, you can avoid the embarrassment, frustration, and stress associated with foreclosure — all while moving forward with your life. Contact us today to learn more.