The question that often haunts homeowners’ minds is, “Will I have to hand my house back to the bank in Sacramento?”. It’s a situation no one dreams of, but sometimes life throws financial curveballs our way, making it challenging to meet our mortgage commitments.
As the pressure mounts, the possibility of surrendering your Sacramento home to the bank looms, leaving you in a state of flux. What’s more, the repercussions can extend beyond mere homelessness, severely denting your credit and future prospects of owning a house.
However, fear not, as there are proactive steps you can take to protect your home and restore your financial stability.
Unraveling the Foreclosure Process
The intricacies of foreclosure can vary depending on your location and the type of mortgage you hold. Typically, if you fall behind on a few mortgage payments, your lender will commence a barrage of notifications and warnings. If you fail to catch up, the process may escalate to the point where your home is put up for a public auction.
The grace period you have to stay in your home after it’s auctioned off varies by state, but sooner or later, you’ll need to secure an alternative residence.
Nonetheless, you have the power to steer clear of this grim scenario through proactive measures.
Exploring Your Options
Waiting until your home is snatched away through foreclosure can have dire implications for your credit score. One viable alternative is negotiating a “deed in lieu of foreclosure” with your lender.
In this arrangement, you willingly transfer ownership of your property to the lender, allowing them to save the considerable expenses associated with the foreclosure process. In return, you get to avoid the devastating consequences of a foreclosure blotting your credit report.
Another avenue to bypass foreclosure is by selling your house before it heads to auction. If you can pay off your loan entirely, you’ll escape any additional penalties, and your credit score remains unscathed. Even if you can’t clear the entire loan, you can make up the difference to shield your credit.
For instance, if your outstanding balance is $100,000, and you sell your house for $90,000, covering the $10,000 deficit will ensure your loan is squared away. In some cases, a seasoned real estate attorney might assist in negotiating a “deed in lieu of foreclosure” agreement, wherein the lender agrees not to chase the remaining balance in exchange for property ownership.
Opting for an Alternative Over Foreclosure
So why do homeowners choose to sell their homes instead of enduring foreclosure, even if they won’t continue living in them?
The answer is clear: the impact on your financial situation and credit score is substantially less severe when you take a proactive stance to sell your property instead of waiting for foreclosure. Foreclosure can potentially hack your credit score by 100 to 150 points, leading to long-lasting consequences.
In the grand scheme of things, the short-term challenge of selling your home now proves to be a far wiser choice than enduring the lasting agony of relinquishing it to the bank.
Reach out to Laurel Buys Houses at (916) 476-2381 or complete the form if you’re intrigued by the prospect of exploring proactive alternatives to steer clear of giving your Sacramento house back to the bank.