How to save your home from foreclosure in Los Angeles County, CA?
First, what is foreclosure? Foreclosure is when a bank or lender auctions off your property at a trustee sale in order to recover the capital that they lent on the property.
The foreclosure process is long and stressful. However, since it is a long process many people procrastinate on getting help. They wait until the last minute to find a solution and they hold onto the hope of finding a way to save their home. While being hopeful is great, hope alone won’t save your home. There are many options when it comes to saving your home but the only way to utilize these options is to take action sooner rather than later. The longer you wait the fewer options you have.
When facing foreclosure you have many options but not every option allows you to stay in your home. If you don’t want to move then you need to act quickly. First we’ll cover the options to stay in your home after that, we’ll talk about a couple options to save your credit but not your home.
How To Save Your Home?
1 The simplest way to save your home is to catch up on your payments. While this may be obvious, some people get so distraught by the fact that they are facing foreclosure that they forget to utilize their resources in order to achieve this. Do you have a car you don’t use? Do you have relatives that could help you? Do you have an insurance plan that allows you to borrow against it? Do you own stocks that you forgot about? While I don’t necessarily think selling your stocks etc. is option number 1 it’s definitely something to consider. What is more important to you, having a home now or having an asset that could potentially make you money in the future.
Another option for catching up your payments is to utilize a company that will loan/give you the money for a percentage of equity in your property. I say this rather than taking out another loan because by taking out another loan you’ll typically have to make payments. These payments could end up making things worse since the previous payments were too much. With these companies, they’re getting a percentage of equity in your property or the ability to buy your property at a later date. So, in many cases they won’t require you to pay back the loan until the home is sold. With this method, you’re giving up some of your future value for the ability to keep your home. This may not be appealing for everyone but it is an option that is available.
2 Negotiate with your lender. Lenders don’t typically want to foreclose on your property. Lenders are in the business of lending money, not the real estate business. Most would prefer if you are able to make payments and work towards bringing your loan current rather than going through foreclosure. Foreclosure is more of a last resort. They’ve been unable to get money from you so they have to foreclose to recover their capital. If you have the ability to get back on schedule in the future, they may be willing to lower your payments.
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When you meet with your lender you’re going to want to let them know why you fell behind and how you will be able to get back on track in the future. Usually they will only be open to working with you if you have legitimate reason for falling behind and it is something that will change in the future. It doesn’t help them to try to work with you if you still won’t be able to afford the adjusted payment schedule.
3 This one should not be your first choice! However, another way to stop a foreclosure on your primary residence is to file bankruptcy. Filing for bankruptcy will allow you to keep your home but will have a lasting affect on your credit and life. A bankruptcy can stay on your credit even longer than a foreclosure. If there is truly no other option, with a bankruptcy, you at least will get to keep your home. Typically, in bankruptcy the lender will be required to work with you to set up a payment plan.
If you can’t save your home…
The next best thing is to save your credit so that you have a good chance of renting or buying in the future. A foreclosure can stay on your credit for 7 years. There are many options when it comes to saving your credit such as a short sale, selling fast to an investor or listing on the MLS.
A short sale is a good option but still has a negative impact on your credit just not as much as a foreclosure. Selling on the MLS with a real estate agent can drag out the inevitable because with an agent there’s no guarantee the property will sell. Also, selling on the MLS on average takes 3–6 months. If you need to sell sooner your house has to be something someone would instantly fall in love with or you’d have to sell at a very competitive price. When you sell at a very competitive price after taking into account paying the realtor’s commission and closing costs you may end up with less than if you sold to an investor in a fast hassle free sale.
There are many investors that can buy your house fast and with cash to help you out of your situation and many of them cover all the fees. These investors can purchase your home in just days, so if you procrastinated and only have a little bit of time before your house is foreclosed on, selling to an investor may be your best option. Investors may not be able to pay full market price but what they lack in price, they make up for in convenience and speed.
Conclusion
In this article, I covered multiple ways to save your home from foreclosure and one option that you have to save your credit in the event that the other options weren’t viable. There are many more ways to avoid foreclosure but these are a few good ones that can be used in many situations. Stay tuned if you would like to learn more about foreclosure in Los Angeles County, I will go over more strategies for foreclosure avoidance in future articles.
