Home foreclosure is what happens when a homeowner is unable to make payments on their property for a significant amount of time. On average, this length of time is from 90 to 120 days. At that point, the lender for your home’s mortgage will attempt to regain what they are still owed. If the home ends up going into default, the lender will proceed with the foreclosure, which, if completed will result in the owner losing title to the property and the owner will be required to vacate the property.
Home foreclosure is a serious consequence that can affect your ability to own another home in the future. Here, the legal experts at Handin Law explain how the foreclosure process works. We can help you navigate this process and understand your options to either keep your home or avoid significant penalties.
Understanding The Foreclosure Process
Foreclosure does not happen overnight after a single missed payment. You would be notified long in advance if your home is about to enter foreclosure, a process called “preforeclosure.” Missing one payment could put your home in this phase, but generally, you would have to miss an additional payment before the bank starts taking action. At that point, your lender would send written notice. You can still save your home by paying a late fee which, at worst, could negatively affect your credit score.
Grace periods, otherwise called “reinstatement periods,” for making up missed payments can vary state by state. If you are unable to get caught up during this window, that is the point at which your lender puts your home in the foreclosure stage.
Different Types of Foreclosures
Not all foreclosures are the same. These are some of the most common types of home foreclosure:
Judicial Foreclosure
An option that exists in all 50 states, judicial foreclosure, is when the lender files a lawsuit to initiate home foreclosure. Homeowners will receive notice by mail and have 30 days to pay what they owe. If the payments aren’t made during this time, the court can sell the home at auction. The sale proceeds would go to the lender to pay off any amount due plus attorney’s fees and court costs. Any overage would go to the former homeowner.
Power Of Sale
Legal in most states, this type of home foreclosure applies to mortgages with power of sale clauses. This allows the mortgage lender to sell the home to regain the money owed if payments are not made in a specified period of time.
Suggestions To Keep Your Home
Consider the following options before your home defaults to foreclosure:
Talk To Your Lender
Lenders would much rather have you continue to make payments than foreclose. For that reason, you should contact your lender as soon as you are aware of financial difficulties and see what options they might have for you. The lender may allow you to modify your loan, defer any principal payments, defer or forgive interest payments, modify monthly payments or even allow you not to make payments for a period of time with the lender forbearing from taking any action against you.
Consider Refinancing
Refinancing is when you take out a new home loan to replace your current one. It involves a new interest rate and terms of payment. You can also save money by reducing your monthly mortgage payment. Contact your lender to see if you qualify for this option.
Sell as a Short Sale
If all else fails, if you owe more money on your mortgage than the property is worth, you may be able to sell your property at a “Short Sale”, which means that the lender will accept less than is owed to them and in return, the homeowner gets none of the proceeds from the sale, but the lender does not pursue the borrower for any deficiency judgment for any balance owed to the lender that may still exist after the sale. Your lawyer can assist you in negotiating with the lender.
Avoid Home Foreclosure in South Florida
Sometimes, life happens. If you encounter financial struggles and aren’t sure how you’ll be able to continue making payments on your home, don’t wait. Contact a real estate attorney today to explore your options before defaulting to foreclosure.
Our attorney can walk you through this challenging process. Call Handin Law today at 1-877-815-4560.