Buying property can be an exciting prospect, especially for first-time property buyers. Unfortunately, there may be unforeseen circumstances that could lead to financial difficulty, causing you to miss your mortgage payments. When this happens, you go into pre-foreclosure before getting foreclosed and your property seized by your lender.
Fortunately, foreclosure in Lexington, KY does not happen immediately after missing a payment. Financial hardship can impact your property, so rather than ignoring the problem until your home is taken, it’s best to act within that timeframe. Here’s what can happen to your property – and what you can do in your best interests.
How Foreclosure Affects Your Property
The first time you miss your payment, your lender may provide you with a grace period to pay before you incur a late fee. If you miss several payments, your lender is allowed to call you and consider loss mitigation. Your lender will then send you a breach letter reminding you that you have fallen behind on mortgage payments and, if unrectified, they will proceed with a foreclosure. After you’re 120 days delinquent, your lender can file for a foreclosure on your home.
In terms of real estate property value, your property’s value will not change while it’s in foreclosure (although, ironically, your neighbors’ property values will drop being next to a foreclosed home). However, once the foreclosure process has passed, the property will no longer be in your possession.
What You Can Do To Avoid Foreclosure
From the moment you miss your first payment up to the point your lender files for foreclosure, you’ve got to act quickly. It might surprise you, but foreclosure is the last resort lenders want to take because of the time, resources, and effort they spend to recoup their losses by going after your property. If you show that you are willing to work with them to repay your loans, they’re less likely to call in foreclosure. Here’s a few options you can pursue.
Ask For A Debt Restructuring
If you can prove to your lender that you are facing financial hardship, they may be willing to restructure your remaining debt. Under a debt restructuring, the terms of your loan agreement are modified so that you can afford to pay your debt. Whether you receive a longer repayment term, reduced interest rates, or cut out a portion of your remaining balance is up to your lender, so it’s best to work with them towards a solution that works for both parties. If you are successful with this, you can keep your property and will have to continue paying your loan.
File For Bankruptcy
You can file for a Chapter 7 or Chapter 13 bankruptcy, though these two options results in different outcomes. Your bankruptcy, however, can temporarily stop your foreclosure, though it can resume depending on the result and the legal decisions based on foreclosure law in Lexington, KY.
Under a Chapter 7 bankruptcy, your non-exempt assets – including your property – will be liquidated. The proceeds will then go to your creditors to forgive all your debts. Under this option, you will lose your property and your credit score will be affected. A Chapter 13 bankruptcy, on the other hand, takes all your debts and restructures them into a payment plan you can pay off within three to five years. You get to keep all your assets, though your credit score will also take a dip.
Should you decide on this option, it’s best to consult a bankruptcy lawyer which path may be best for you.
Sell To A Professional Homebuyer
There are two stages before entering foreclosure: when you’re in breach, and when you’re in pre-foreclosure after 120 days. The only way to sell your house when you’re in pre-foreclosure is through a short sale which requires your lender’s approval and may still leave you with debt, but avoids affecting your credit score.
However, if you’re only behind on mortgage payments and your lender has not yet filed a notice of default, you’re still within your rights to sell your home without their permission. Considering that you have 120 days before they can file, time is of the essence, so you’re going to have to sell your house fast. A house in Kentucky can take an average of 89 days to sell on the real estate market, so your best option is to sell through a professional homebuyer.
In Kentucky’s real estate market, it takes around 54 days to receive an offer and 35 days to close. This does not include any delays you might experience. For the professional homebuyers at Rylo Homes, on the other hand, we buy houses in Lexington, KY fast and can give you an offer in less than 72 hours after contact. We pay in cash, so there’s no need to wait for a loan approval. After at least 14 days, you can expect the money to be transferred to you.
Out of all the options listed, this is the only option that provides you with funds to pay off your missed payments, avoid bankruptcy, and avoid financial decisions that negatively affect your credit score.
Avoid Foreclosure, Sell Your House ASAP!
When it comes to facing foreclosure in Lexington, KY, the best solution is to know all your options and weigh out the best one. It is possible to work out a solution with your lender before making financial decisions that can affect your financial stability for years to come. But if you feel that selling your property as fast as possible is a more practical solution to pay off your loan, then contact Rylo Homes today and get a fair cash offer on your home in 72 hours or less.
