Often we are asked by Prescott, Prescott Valley, and Chino Valley homeowners about their options when they are facing foreclosure.
We are not lawyers or accountantS and you should consult with professionals in those areas before making any decisions that will affect your credit for at least 7 years.
Here are some of the frequently asked questions we get:
1. I missed some payments on my property recently, am I in pre-foreclosure?
There are a few options you have to avoid having a foreclosure on your credit history.
- Contact your mortgage company and find out if you can reinstate the loan. Sometimes they will allow you to put any late payment fees and interest on the backside of your loan and bring you into compliance.
- If you have had income adjustments or you will not be able to continue payments you should try to sell your home as soon as possible. Making contact with your mortgage company is important. They want to see the property being marketed. Be aware of time restrictions and market conditions. Also inquire about what you owe vs. what your property value is worth. A short sale may need to be negotiated. You should talk to the lender about the possibility of a sales price below what is owed on the mortgage and what steps will need to be taken.
- If your situation has changed, refinancing through another program might be a good option. You will want to seek advice of other lenders and programs that may be available to you to lower your monthly payment.
- There is a possibility of adding a 2nd mortgage and using that cash to help bring you current with your loan. This avenue should only be explored if there was a short term reason for the delinquent and missed payments.
2. Should I wait for the mortgage company to foreclose?
Whatever you do, don’t wait for the mortgage company to foreclose. Contact a specialist right away to discuss your possible options. Be aware of individuals or companies that may try to profit off of your distress. It is always best to contact an agent or someone that will represent your best interest.
3. What should I do if someone offers to buy my home?
If you have someone that wants to pay cash for your house, tell them that you will select an agent to perform a Broker’s Price Opinion (BPO) and they will need to pay $100-$150 for the report. Be aware of companies that will offer to buy your property and allow you to stay there. They usually offer to set you up on a lease to own option. Contact an expert to make sure this company is legitimate. There are many companies that will take advantage of your situation and it could create a much worse outcome.
4. What else should I do?
Do Not Ignore The Problem
If you know you are having trouble making your payment and/or are receiving letters from your lender you must confront the issue. The further behind you become on your payments the more difficult it will be to modify your loan, so act fast.
Contact Your Lender
Did you know it costs the bank over $58,000 out of pocket to handle the average foreclosure? The lender does not want your house! They will often be willing to do a loan modification in order to ensure that you are able to stay in your home. Be sure to keep in contact with your lender, refusing to open your mail will not be excused in court. If you need your bank’s phone number, check this list of mortgage company phone numbers:
Know Your Rights and the Laws in Arizona
Be sure to re-read your loan documents and make sure to educate yourself on the laws and process in Arizona:
Contact a Housing Counselor
Try to find a HUD approved counselor. Often a HUD counselor will offer their service for free or at a very low cost. Additionally there are several businesses that can help you with your loan. You must beware of scams; there are plenty of businesses that claim to have the ability to get rid of your debt and mortgage burdens. Read everything carefully and understand that you should never sign anything you do not understand.
Cut Back on Any Excessive Spending
Create a list of priorities such as health care and your mortgage, and take a look at assets you have. For instance, you may want to give up your second car or sell off your life insurance policy. It is important to let your lender know that you are making an effort to pay your mortgage.
The most important step to avoiding foreclosure is to explore all of your options. Only by confronting the problem head on can you tackle the issue. Don’t let yourself become a statistic. Take the steps necessary to avoid foreclosure today.