Foreclosed Homes

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How Can I Save My Home From Foreclosure?

One month becomes two, and then before you know it, you have fallen way behind on your mortgage repayments. Your lender has threatened to repossess your home, and foreclosure is around. Many people panic or bury their heads in the sand—making things worse than they need to be. 

All is not lost just yet. Educating yourself is a great way to focus your mind and create a plan of action.  We have put together five things you can do to save your home from foreclosure. 

1. Know the process 

You will have received notifications of missed payments from your lender. It’s important to calmly read through them as it will contain information about your available options plus any specific timeframes and laws for your state. 

After the first 30 days of not paying, you will receive a late payment notification and a mark on your credit score.

After 90 days, you will receive a NOD—Notice of Default. You now have 30 days to repay what you owe on your mortgage or go to court.

If you ignore this warning, the court can put your home up for auction within as little as seven days. 

2. Contact HUD 

The Department of Housing and Urban Development has housing counselors that can provide information on your best options. They can give more details on the best financial solutions for your situation for free. If you make sure you are talking to a HUD counselor, you avoid the risk of being scammed.

 3. Make a new, realistic budget 

Lenders are more inclined to offer different solutions when they can see you are proactive. Look for ways to save additional money, whether that’s by selling things or picking up more work. Tighten your budget and cancel any unnecessary subscriptions. 

4. Be clear on your numbers 

Once your new budget is complete, you will know how much you can make on your mortgage repayments. Most say that 30% of your gross income should go towards your mortgage. You also need to know how much your home is worth. Prepare copies of your proof of income/benefits, bank statements, and your last tax return. 

5. Talk to your lender 

It is always best to remain in contact with your lender to update them on the situation. They don’t want to foreclose on your home because it’s a lot of work for them, as well as the financial cost. Here are some of the possible solutions that a lender might offer: 

Reinstatement—If you have managed to raise some extra cash, you can pay back what you owe and reinstate your mortgage. If you can’t make the full amount, you could agree to a partial reinstatement.

Temporary indulgence—If you expect a lump sum of cash, a temporary indulgence is a 30-day grace period to pay all of the outstanding amounts in one go.

Refinancing—With your lender, you can make a plan so that monthly repayments are more manageable. This typically includes some form of loan modification like adjusting the interest rates or length of the loan.

Forbearance—Mortgage repayments are reduced or temporarily suspended to give you a chance to sort out your finances.

Pre-foreclosure sale—A short sale means selling your Dallas home quickly but for less than what you owe. The lender has to be in agreement. You can also sell to a cash investor, but you will end up selling for less than the value of your home in both cases.

Deed in lieu of foreclosure—The lender agrees to buy your home off you.

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How to Avoid Home Foreclosure in Dallas

Foreclosure is likely to happen when you begin to start missing your mortgage repayments. In Dallas, a lender can begin the foreclosure process after 120 days of payment delinquencies. A foreclosure will have a massive impact on your credit rating. You should take the necessary steps to prevent it wherever possible.

Here are some things that can help you avoid home foreclosure in Dallas. 

1. Recognize the problem

As soon as you know you are heading for financial difficulties and you aren’t going to make repayments, you need to contact your lender. The more behind you get, the harder it becomes to avoid foreclosure. Be sure to answer all calls and open all mail you receive from them. 

2. Know your rights

It would be best to read the fine print of your mortgage conditions and the laws related to foreclosure in Dallas. One of the best things to do is contact a HUD-approved counselor who can provide counseling for free or minimal fees. 

3. Assess your spending and assets

When looking at your budget, healthcare is your number one priority, followed by your home. You should assess everything else. Cancel anything unnecessary, even if it is just until you get back on your feet. See if there is a way to delay credit card payments or other loans. Also, look at your assets that you might be able to sell or the possibility of a second job. 

These actions might only make small differences, but it does show your lender that you are making the necessary efforts. 

4. Be aware of foreclosure scams

Scams can include payments to prevent foreclosure, or you might sign what you think is a legal contract. Still, you have signed your home over to the con artist. You will end up wasting money that you could put towards your mortgage. Only listen to the professionals from HUD and your lender. 

Financial Solutions to Avoid Foreclosure in Dallas

Below you will find some options that you can discuss with your lender. 

Reinstatement—This is a one-off payment of all the repayments you have missed plus any interests or fees that might be included. You will need to make the full payment before an agreed date.

Short Refinance—In some cases, the lender may pardon some of the money you owe and then create a new loan to incorporate the remaining amount you owe.

Short sale—A short sale or selling to a trusted Dallas real estate investor can help prevent foreclosure. 

Forbearance—If you can provide a valid reason for your financial difficulties—medical emergencies or job loss—your lender may be willing to grant a forbearance. Here, you could take advantage of a temporary suspension of your repayments or a reduced repayment amount while finding a long-term solution.

Mortgage Modification—Refinancing your loan to arrange a monthly repayment amount that you will be able to make. This often means extending your loan term.

Refinance with a hard money loan—If your lender isn’t able to provide one of the above mentioned, you might need to turn to a hard money lender. This is often considered one of the last resorts as the interest rates are horrendous. There will probably be additional fees. Still, it’s a useful way to avoid foreclosure.

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How to Sell a Dallas Home in Foreclosure

If your Dallas home has gone into foreclosure, it is challenging trying to see the practical side of things and decide the best way to go. Foreclosure is—usually—when you have missed the fourth repayment of your mortgage, and the lender begins the process of repossessing your home. This can take anywhere from 6 months to over one year. 

What Can I Do Before My Dallas Home Goes into Foreclosure?

There might be ways for you to reorganize your financial situation with the help of your lender. 

A loan restructure–A lender may agree to restructure your loan to incorporate missed payments and fees into a new monthly amount. You may even be able to lower your interest rates.

Loan forbearance—Your lender might agree to reduce or suspend payments until you are financially back on your feet.

Find extra cash—Take on another job, sell anything you can, see if any family members can loan you some money.

Cut costs—Cancel unnecessary subscriptions, look for cheaper transport, stop wasting food. It doesn’t sound like much, but it will add up.

Pay off things with a higher interest rate first—That credit card was a good idea at the time. Still, you might find that your monthly repayments are only paying off the interest. Look at debts that have a higher interest rate and pay them off as soon as you can. 

Lenders will be more inclined to agree to a loan restructure or forbearance when they can see that you are doing all you can to keep your home. 

What Can I Do Once My Dallas Home Goes into Foreclosure? 

Hire a Real Estate Agent to Sell Your Dallas Home

An experienced real estate agent will be able to help you get the highest price for your home. This will have to be enough to cover the remaining amount of your mortgage, as well as the missed payments and fees. Ask your lender if they can delay the foreclosure process and find out how long you now have to sell your home. 

Sell Your Dallas Home to a Cash Investor

Cash Investors tend to buy homes as seen for cash in any condition. You may not get as much as you would from a real estate agent, but you will be able to sell your home faster—sometimes even in a matter of just days. 

What Is a Short Sale?

It is worth asking your lender if they will agree to a short sale. A short sale is when a property is sold, but the amount will not cover all that is owed. You may ask why a lender would agree to this—but it is a better option for them than a foreclosure. It will also save a nasty knock on your credit score too. 

Even if your home has gone into foreclosure, you can still sell it. In fact, you can sell your home until it is sold at auction or when the bank decides to repossess it.