What is a foreclosure and how can you avoid it?

On Behalf of | Sep 23, 2022 | Foreclosure

People who own a home understand the importance of making their payments – but changes in circumstances, such as a job loss or serious illness, can cause them to fall behind. When the mortgage isn’t paid, the mortgage company will take steps to get its money. One of these is filing for foreclosure.

Foreclosing on a home means that you lose possession. It goes back to the mortgage company so it can be sold again, but you can still end up owing the difference between what the bank gets for the home at auction and your loan amount. Plus, you get a negative mark on your credit report that can affect your ability to buy in the future. For some homeowners, refinancing the mortgage might be one option, but this is dependent upon qualifying for the new mortgage. That means exploring other options.

A short sale may help avoid foreclosure

A short sale may help you to get out from under a home that you can’t afford. You have to get the mortgage holder to agree to this, and it isn’t a quick way out. You need to find out if you’re going to be held liable for the deficiency between what you owe and what the home ultimately sells for. Ensure you have it in writing if the mortgage company claims it won’t go after you for the difference between what you owe and what you get in the short sale.

People who are facing foreclosure should ensure they’re protecting their legal interests. Learning the options that you have might help you to come up with a plan to address the issue. Ultimately, the mortgage company will have to do what it thinks is best, and you need to do what you think is best for you.