It might seem like the foreclosure process is unavoidable after you’ve missed a few mortgage payments and entered delinquency. However, that might not necessarily be the case.
Today, we’re looking at ways to stop foreclosure in North Carolina.
The first thing you should always do when you miss a mortgage payment is contact your lender. It’s essential to keep in mind that the last thing your mortgage lender wants to do is initiate the foreclosure process.
Foreclosures can often get expensive for the lender, consuming both time and money. Even after a foreclosure is completed, the lender needs to figure out how to turn the property into capital. Because of this, it’s often more profitable to reach a different agreement with your lender, even if that means you pay less money on your mortgage than you initially agreed.
There’s a chance that you may be able to work out another deal by calling your lender, especially if you explain your financial difficulties. For example, if you are facing a medical crisis and can’t make mortgage payments but will be able to in the future, your lender may agree to refinance your loan instead of foreclosing.
Before you attempt to modify your loan, it’s a good idea to see if you can get current on your existing mortgage first. If you don’t already know, you should ask your lender how much you owe and how many months you’re behind.
In North Carolina, a lender usually can’t begin foreclosure proceedings until you’re at least 120 days behind on your mortgage payments. This is commonly referred to as the pre-foreclosure process.
Make sure to also ask your lender about any late fees that may be charged, as failing to pay these could cause you to remain in the pre-foreclosure process, which is a dangerous place to be.
The good news is that you can “get current” on your loan even if the foreclosure process has begun. Were you to pay off the total amount you owe before a foreclosure sale starts, you might be able to redeem your property.
In the state of North Carolina, you’ll usually have up to 10 days to redeem your property by paying enough that you become current on your loan. This can even apply when a prospective buyer bids on your home.
If there’s no way that you can get current on your payments, then it might be a good idea to ask your lender for a loan modification. When you modify your mortgage loan, you’ll change the mortgage terms to make the monthly payments easier to manage.
Unlike a refinance, where the original mortgage is paid off, loan modifications are merely adjustments to the existing agreement. These adjustments can often lead to lower interest rates in exchange for a longer payment timeline.
These changes can be especially beneficial if you aren’t able to make your mortgage payments due to high interest rates, the original loan term, or something unexpected popping up. The critical thing is that most loan modifications will require a strong credit score and you being on good terms with your lender. If you have a history of delinquency, they might not be inclined to offer a loan modification.
Remember that foreclosing on a house can be an expensive process for a lender, so it’s worth trying to sway them into a loan modification that’s beneficial for all parties. It is important to note that the lender has two separate departments for loan modifications and foreclosure — and both departments will be working simultaneously if the situation is applicable. If your loan modification gets denied, and you are relying on the new agreement to be approved, this could shorten your timeline for finding another option before foreclosure.
Should attempts at a loan modification fail, it might be worth pursuing a short sale. A short sale involves finding a willing buyer for a property that will pay as much as possible toward the remaining balance on the existing mortgage.
It’s called a “short sale” because it’s not for the full amount owed on the mortgage. The bank, credit union, or alternative lender you use might accept a short sale as it will likely reduce their potential losses during a foreclosure.
The easiest way to find someone for a short sale is by contacting real estate professionals, such as house flippers, who may be willing to take your property off your hands. Of course, a short sale would mean you’d have to move out and find other living arrangements quick.
If your lender isn’t willing to modify your current mortgage and you can’t find anyone interested in a short sale, you could offer your lender a deed in lieu of foreclosure. When you make this offer, you’ll allow the lender to take total control over your property. They could sell, renovate, hold, or do whatever they want with it.
While you would have to leave the premises, you would avoid foreclosure from showing up on your credit report. Foreclosures stick around on your credit record for seven years, making it very difficult to buy another home as long as they’re present.
A deed in lieu of foreclosure can be especially useful if your property is in excellent condition and your lender thinks they can sell it quickly and reasonably. However, your lender isn’t guaranteed to accept an offer of a deed in lieu of foreclosure and doesn’t even have to review it.
If none of the above efforts are successful, consider co-owning with Balance. If you’re approved for Balance’s homeownership program, Balance will replace your current mortgage with an equity investment.
We’ll also replace your monthly mortgage payments with a monthly payment to Balance for your occupancy and share of the insurance, taxes, and HOA fees. On top of that, we’ll give you access to your equity, which you can use to pay off debts, make renovations, build your credit, or anything else you need.
In the meantime, you can focus on rebuilding your credit score, building your financial profile, and saving money. You can even buy us out of our equity and regain sole ownership of your property at any time — all without ever having to move out.
When you contact Balance, we’ll review your situation and potentially step in. If we decide to enter into co-ownership, we’ll purchase the mortgage, and you’ll start making monthly payments to us instead of your current lender.
During this time, you can stay in your home and eventually have the opportunity to buy us out, therefore regaining total control of your property’s equity once more. Contact us today to see why so many homeowners have trusted us to help them avoid foreclosure and stay in their homes.