Every now and then we all have the hard moments. Having a tough time as a property owner could mean losing the biggest investment of your life: your Houston home. When you are unable to afford your mortgage and insurance payments, or you miss a certain amount of payments, you are about to face foreclosure from your lender; all that depends on your mortgage.
Foreclosures Happen To The Best Of Us
For most cases the process of foreclosure does not begin until about 3-6 payments you have skipped. First, it’s important to realize that hedging is a process. The first step is known as pre-foreclosure. It means that the house is in default, and the bank will foreclose on the house or not. The second move is to sell short. This is where the owner wants to sell the property before the bank forecloses, but due to the debt the market value is far short of their balance.
They may or may not consider offers less than the balance owing at this stage, depending on the bank. If the owner can get the bank to sell short, their reputation is much higher. The third stage is the Auction for foreclosure. This is when the bank is trying in a short period of time to get the most money for the house. The fourth stage is an REO, standing for “Owned Real Estate.” If the property does not sell at auction, then the bank will repossess the property and put it for sale on the market.
“Foreclosure” is the bank that takes title or “possession” of your Houston building, based on the procedure described above. This would impact your credit score and would also show up in any reports that future landlords would run.
The mortgage remains on your record for at least 7 years, often 10 years, before dropping out. You will have more time to stay in your house, depending on your case, if you allow it to go into foreclosure regardless of the statutory duration of redemption. This time period depends on whether you are taking title into a mortgage or a deed of trust. When you have a mortgage, then it can take 30 days or as long as 2 years to complete the transaction. If you have not restored your loan and are still unable to make your payments at the end of the repayment period, then you really must move out. When you’ve taken the title in a deed of trust, there’s usually no formal window of redemption so you need to move out immediately.
Is A Short Sale Really The Answer?
You have the ability to mention your Houston house as a short-sale during the foreclosure process as mentioned above. The best time for a short sale is the span of time when you know that you can not make the payments as stated in your loan agreement, and until the lender takes legal action against you and legally owns your estate. You can put your house on the market and try to get an offer that will fulfill or even get close to your loan balance.
This can be a complicated process as you will have to continuously consult with the lender about the offers you are getting and wait for them to accept or counter the offers you are getting. If you have an offer the bank is willing to consider, selling your Houston house to that purchaser will relieve you of some of the collateral harm caused by foreclosure, but it would still impact your reputation negatively.
The better choice will be to fully stop the bankruptcy process and negotiate a sale of your property before you get to the point that payments on your loan are missing.