3 Ways to Avoid Foreclosure in Knoxville, TN
Foreclosure happens fast. Any crisis could put your home at risk, especially if you’re making costly mortgage payments. Fortunately, you may be able to avoid foreclosure (and save your credit!) by taking the proper steps.
Find out how to stop foreclosure on your house in Knoxville, TN here.
What Is Foreclosure?
Foreclosure allows a lender to repossess the property of a borrower who’s failed to make mortgage payments. A lender is a person or financial institution that issues loans.
When you sign a mortgage or a deed of trust, you agree to make monthly payments to your lender until you’ve paid off the house. If you’re unable to make these payments, the lender can try to recover their losses by taking your home and selling it.
Once a house is foreclosed on, the borrower is forced out of the property. The foreclosure is documented on their credit report, damaging their credit.
What Does Pre-Foreclosure Mean?
Pre-foreclosure occurs before the lender takes ownership of a property. A lender can take action 90 days after the borrower has made their last payment.
The foreclosure process begins with the lender filing a notice of default. This is a public statement asking you, the homeowner, to catch up on mortgage payments.
The good news is you have options to save your home once the pre-foreclosure rolls out. That said, you’ll need to take action now! Your options for avoiding foreclosure will depend on your financial situation.
How to Stop Foreclosure
1. Work It Out With Your Lender
If you’re behind on loan payments because of a minor setback, communicate that with your lender. They may be willing to create a repayment plan to get you back on track. With many repayment plans, the lender will add the owed amount to your monthly payments so you can gradually pay it back.
However, before you work out a repayment plan, consider what you can afford monthly. Don’t try to pay back more than you can at a time. And, if necessary, ask about different mortgage relief programs.
The following options may be offered by your lender depending on your situation.
Mortgage forbearance allows buyers to reduce or pause their monthly payments. However, the borrower must use this time to save money and resume paying back the lender.
You, the borrower, are also expected to pay back what you missed during the forbearance period.
A loan modification changes the terms of your mortgage loan. When refinancing isn’t an option, a loan modification may make your payments more budget-friendly. This relief program can also help keep you up to date on paying off your loans.
Your lender may ask you to submit your financial information to see if you qualify for the new terms. That said, this process is often time-consuming – and you could be denied.
Government Assistance Programs
If you’re looking for advice, there are housing counseling agencies (sponsored by the Department of Housing and Urban Development) that can help find mortgage relief options that work for you! They can also teach you how to budget and simplify legal documents.
Plus, many of these services are free or of little charge!
2. Sign a Deed in Lieu of Foreclosure
If foreclosure is looming, your mortgage company may accept a deed in lieu of foreclosure. This agreement transfers ownership of your home to the lender to stop foreclosure.
A deed in lieu of foreclosure can free you from your mortgage, preventing foreclosure from blemishing your credit score.
However, lenders don’t have to accept your deed in lieu of foreclosure. Depending on the loan, your lender may only receive a payout if your house is in pre-foreclosure. So, if your lender thinks they can get more money from foreclosure, they may refuse your offer. In addition, a deed in lieu of foreclosure will still damage your credit by about the same amount as if you went through the entire foreclosure auction process.
3. Sell to a Reputable Home Buyer
When foreclosure is unavoidable, selling to a real estate investor experienced with the pre-foreclosure process is your best option.
Most houses today have enough equity to pay off the loan in full and give a cash payment to the seller. In addition, a real estate investor will know how to get all the details of the sale completed, such as ordering the payoff, while using a title company that can close quickly.
If done correctly, you’ll receive cash for your house before the foreclosure finalizes, repair your credit, and receive the peace of mind of knowing this was taken care of correctly.
We Buy Houses in East Tennessee
At Reliant Home Buyers of TN, we’ve helped hundreds of homeowners sell their property for cash! Whether your house has foundation issues or water damage, we let you close when you want, as fast as you want.
Here’s how our three-step home buying process works:
Tell us about your home by calling 865-567-6391 or filling out our contact form. We’ll get in touch to schedule a quick walk-through of the property. If we’re interested in buying, we may make you a WIN-WIN proposal right then and there!
With us, there’s no waiting for buyers – and you’ll avoid making expensive repairs before selling! Accepting our fair cash offer is the quickest (and easiest!) way to sell your house as-is.