Common Questions About Foreclosure And Your Home In Warren, Michigan

by Nov 15, 2021

Buying your first home is a huge financial decision. And like any investment, there will always be some form of risk. Unexpected events can result in financial difficulties, which can lead to missed mortgage payments, which can put you at risk of foreclosure.

In case you’re at risk of foreclosure, your next best step is to think objectively and consider your options for minimizing your losses or avoiding foreclosure for your home in Warren, Michigan altogether. Here are some answers to the most common questions you may have when you’re at risk for foreclosure.

What Happens When I Miss A Mortgage Payment?

The first time you miss a mortgage payment, your lender may either give you a grace period or charge a late penalty. If you manage to pay off that missed payment, your payments will continue as usual. However, if you miss several payments, your lender may start to reach out to remind you to make your payments. Some may send a pre-foreclosure breach letter, while some even offer to undergo loss mitigation to help make payments easier.

After 120 days from your first missed mortgage payment, your lender can now file for foreclosure. You can still try to reach out to your lender, but this can vary between lenders. If nothing has been done before the court finalizes the foreclosure, the ownership of the property will go to the lender. The lender can then sell or auction off the property and recoup their losses from the sale.

What Are The Consequences Of Foreclosure?

Once your home is foreclosed, you lose possession of your home. Your property will be given to your lender, who will sell it to recoup their losses. Aside from losing your home, two major things can happen.

First, your lender can legally evict you from your home. After the foreclosure process is complete, the court will legally give your home’s ownership to your lender. Since you are no longer the owner of your home, your lender can formally evict you and your household from the premises.

Second, your credit score will drastically decrease, and it will take years before your credit score can recover from your foreclosure. This can affect your ability to get loans in the future because lenders may see you as a financial risk, so they may only offer deals with low loan amounts or high interest rates. Low credit scores can also affect your ability to find insurance deals, phone plans, and credit cards. Future employers may also check your credit report, especially if your job deals in managing a company’s finances.

What Can I Do To Avoid Foreclosure?

From the moment you miss your first payment up to before the foreclosure is finalized, there are a number of ways you can avoid foreclosure:

  • Catch up on your missed payments – Use emergency funds or borrow money from friends and relatives. You may be required to pay a late fee.
  • Debt restructuring – Filing for foreclosure is expensive and time-consuming, which is why lenders see it as a last resort. Some lenders offer loss mitigation for buyers who are behind on payments. If not, try talking to your lender and see if you can renegotiate terms to make it easier for you to repay your loans.
  • File for bankruptcy – Filing for either a Chapter 7 or Chapter 13 bankruptcy can stop foreclosure proceedings. If you want to keep your home, it’s recommended you file a Chapter 13 bankruptcy.
  • Sell your home – Before getting your notice of foreclosure, you are free to sell your home in Michigan without your lender’s permission. You can sell your property and then use some or all of the proceeds to pay off your remaining loan balance.
  • Short sale – After receiving your notice of foreclosure, you can only sell your home through a short sale with your lender’s permission. You will have to sell your home below market value, and all proceeds will go to the lender, who will choose if you have to pay off the remaining balance (if any), or if they will forgive the rest of your debt.

Conclusion

It’s best to avoid foreclosure and consider all your options and alternatives. Should you be at risk for foreclosure, options like selling your home can prevent the financial setbacks that come with foreclosing your home. But, given that there are only 120 days from your first missed payment for lenders to file for foreclosure, time is of the essence, so you’ll need to sell your house in Warren, MI fast to prevent proceedings to begin.

At Select Home Solution, we buy houses fast with fair cash offers. On top of a fast selling process, we take out most of the hidden costs of selling your property – including renovations, repairs, and even commission fees common when selling on the real estate market. Contact us today to schedule a property viewing and receive a fair offer within 72 hours or less.

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