Foreclosure Effect on Credit Rating

If you are starting to default your mortgages, it can lead to foreclosure which in turns provide a negative mark on your credit score. Foreclosure is something that any property owner hopes to stay away from because its negative effects can last for years. Property owner who have faced foreclosure endure from incapacity to have a loan or difficulty in borrowing from months to years.

Foreclosure is very expensive both for the bank and property owner. Property owner faces expenses such as the cost of moving to another location or property, deposits to rental property, and hiring helps for the move. Aside from the negative effect on credit score, property owner faces the risk of deficiency judgment. As soon the bank reclaims your property, it will attempt to sell the property at an auction for the amount you owe. If no one buys your property in an auction, the bank will try to sell it via traditional way of selling. As we know, traditional selling process can take months with no guarantee of success. Your bank may not wait for such time and will sell your property well below its fair market value in the hope if selling it quickly. Selling your property below its market value may result to a successful sale but if the amount is not enough to cover what you still owe, the bank may and can sue your for deficiency.

Foreclosure’s negative effect will stay on your record and it will lessen over time. You can start rebuilding your credit rating by applying for small loans or credit cards and making the payments on time. Keeping your credit card balances will also help restore your credit rating.

To avoid the negative effects of foreclosure, you can sell your property before it happens. And the key is to sell it quickly. Although you will still lose the property you will earn cash from it and you certainly can use the money for your transfer. Sell your property to private investors like Lucas Properties and get cash immediately.

What to Do When Foreclosure Looms

Foreclosure notice is the last thing a home owner would like to receive. Mistakes can happen so when you receive a notice, check for accuracy of the information. It cannot hurt to hope that the notice was sent as an error. Alternatively, once you have confirmed that the foreclosure notice is yours, start making plans and look for options on how to save your home and avoid foreclosure.
Do not ignore the notice. Contact your lender immediately. Gather the documents supporting your financial situation as well as your account information. A record showing payments and amount of payment made can come in handy in determining if the foreclosure is justified. For example, the payments you have made were not recorded properly which resulted in defaulted payments. When you contact your lender be upfront about your financial situation and be prepared to discuss possible options in details.
If the cause of your missed payments is temporary and has been fixed, you can have one of these options: repayment plan, loan modification, forbearance and reinstatement. All these still require you to pay your monthly dues with slight changes to your regular amortization in order to accommodate your financial situation. In the event that you are still unable to pay even with the new payment options being offered you can always borrow money from family and friends. Sometimes, people tend to forget this as their first option because they are ashamed. In as much as possible, you would not want friends and relatives to know the financial difficulties you are having. If they are able, they are the ones most committed to help you out.
Sell your home. In as much as you would like to stay in your home, the best solution for someone facing foreclosure is to sell the home. Assess your finances carefully and if you are clear that you cannot carry the financial load it is better to sell the property and save the equity until you are able to buy a new home. When you are facing foreclosure, the target is not just to sell your home but to sell it quickly. And there is no faster way to sell your home than to sell it to a private land investor. Assess what your home is worth and contact Lucas Properties LLC, a private land investor dedicated to help home owners facing foreclosure. Earn cash from your property and move on with your life.

The Negative Effects of Foreclosure and How to Prevent It

Foreclosure is a legal process where the mortgage holder gains ownership to your land and has the right to sell the property in which proceeds will be used to pay off the mortgage if you are in payment defaults. It usually occurs when you have failed to make the payments and have violated the mortgage terms. There are two types of foreclosure: judicial and non-judicial. Judicial foreclosures are overseen by court and it involves the lender filing a lawsuit for the right to foreclose the property. It is an expensive process and very time consuming which is why most lenders prefer the non-judicial foreclosure. Non-judicial foreclosure, on the other hand, is much simpler and does not require court intervention.

In both process, the land owner receives legal notice of foreclosure. The notice will then be published in local papers and the property will be sold in an auction. Foreclosure processes may vary from different states but the mortgagor can initiate the proceedings as early as 30 days after the missed payment.

Foreclosure can have a devastating impact to land owners. Bad credit score is probably the most damaging results of foreclosure. When your land is foreclosed by a lending company, you are at risk of having a bad credit score. Opening new lines of credit and getting new loans are almost impossible. The size of impact depends on whether your debt was forgiven and the amount you still have to pay before the foreclosure. Bigger delinquent amount can result to a more damaging credit score. Another consequence to foreclosure is loss of property. As mentioned earlier, the lender will take ownership of the land that a loan was approved for. If the land holds a sentimental value to the owner, he can bid at the auction and attempt to purchase the land. However, this is very unlikely because the land will be more expensive as compared to paying off the loan in the first place. If you have been foreclosed in the past, you might find yourself in trouble keeping and finding new employment. Some employers consider a good credit score as basis for employment and a bad credit score as grounds for termination.

You can actually prevent foreclosure by selling your land. Although, loss of property is unavoidable, this is less damage compared to getting a bad credit score or being fired from your job. With a good credit score and stable job, you can acquire new properties in due time. Contact Lucas Properties LLC if you want to sell your land quickly. They will give you cash for your land in “as is” basis so you don’t have to worry about spending money for repairs or cleaning.

Distressed Properties: Options for Distressed Seller

A distressed property, in real estate terminology, means that a property is under foreclosure and is up for sale by the mortgagee. Characteristics of distressed property are oftentimes having a negative impact on the fair market value of the property. It is being sold by land owner to avoid foreclosure and at the same time to try and cut the financial loses.

If you are one of the land owners with distressed property, know that you are not alone. It is a sad fact that facing foreclosure is an overwhelming experience, but there are several options for distressed sellers other than foreclosure. If you missed payments for temporary reasons that have been remedied, you have the option to reinstate the mortgage. Reinstatement is the easiest way to avoid foreclosure as it does not need the mortgagor or lender’s approval. You can simply ask the total amount, which includes missed payments, late fees and legal fees, owed to date and pay for it. Once the delinquent amount is paid in full, the mortgage is reinstated.

Another option to consider is forbearance or re-payment plan. The good thing with re-payment plan is it allows the owner to pay the delinquent amount over time; however, owner is required to submit a financial documentation proving that he will be able to comply with the terms of repayment plan. In forbearance, lender will add the missed payments on top of the regular loan amortization for a period of time, for example, 12 months. Once the owner completes the 12^th payment, the mortgage will go back to its regular amount.

In the event that the land owner can’t qualify for the two options mentioned earlier, he has the option to sell his land via short sale. This process involves putting the land on the market and the owner must have financial hardship to qualify. In this case, financial hardship is no longer in question. It is just a matter of presenting the necessary documents as proofs of financial hardship. Short sale allows the owner to salvage his credit score and keep the foreclosure off his record. While short sale seems straightforward, it is a complicated process and needs the expertise of experienced professionals. To keep yourself free from stress over short sale, you can sell your land to Lucas Properties LLC. Lucas Properties provides cash for distressed properties minus the hassle of traditional selling process.

Do You Need Help with Short Sale Process?

We cannot deny the fact that at some points in our life we are subjected to a financial crisis. This can be attributed to one or more of the following: job loss, disability, long term medical issues, bankruptcy, and divorce. Because of these unfortunate events, people are in the danger of getting their homes foreclosed. Foreclosure can have a demoralizing effect on someone’s credit score that is why most people are warming up to the idea of short sale.

A short sale happens when a person no longer has the capacity to pay the outstanding mortgages on the property because of the reasons mentioned above. Short sale allows the homeowner to pay the outstanding mortgages for less than the amount he owed. There is even a possibility that the homeowner will only pay the primary mortgage under its original terms. Although there is still a short sale penalty, its impact on the credit score is not as bad compared to foreclosure because short sale process takes less time to complete.

Short sale is preferred by both homeowners and lenders because of its apparent benefits. For lenders, they will have a possibility of getting financial gains by putting the property in the market and have the chance to draw prospective buyers than by actually foreclosing the property. It has been said that foreclosure fees can range from $50,000 to $70,000. Homeowners prefer short sale for obvious reason; that is to avoid the negative impact of foreclosure in their credit score.

So how do short sales works? Homeowners who are considering short sale should evaluate the property in question. It is advisable for parties involved, seller and buyer, to keep the process in the shortest time possible otherwise all will lose faith in the system. Homeowner or seller will coordinate with the lender and discuss the possibility of a short sale. Lender may ask pertinent documents to gauge whether short sale is the only way out. Such documents may include financial statement, letter of intent, tax returns papers, and pay slips. 

If you need assistance with the short sale process, contact Lucas Properties LLC for more details. They are experienced in the short sale process and will work out the best deal for you,the bank and the buyer.