Nobody likes the idea of giving their house back to the bank. But it’s more common than you might think. Sometimes life seems to turn against you and those financial commitments become too much to handle.
If things get really bad, you may be forced into the unfortunate situation of having to give your house back to the bank in Murfreesboro TN, leaving you at least temporarily without a place to stay. If this happen there are usually long-term consequences, including a major hit to your credit score which impacts your ability to buy a house in the future.
No body wants that to happen. It’s bad for you and the bank. Fortunately, there is something you can do to protect yourself and get back on track to financial solvency.
Here’s a brief overview of the foreclosure process
The foreclosure process can vary depending on the state and the type of mortgage you have. Here in Tennessee we have what called a non-judicial foreclosure process where the bank doesn’t have to go to court in order to start the process. It’s faster than the judicial process.
Usually, if you miss a few mortgage payments, your loan company will start sending you notifications (nastygrams) telling you to call them to arrange payment, etc.. If you fail to get caught up on the back mortgage payments you missed, the bank with pass your file along to a foreclose attorney typically referred to as the Trustee. He will file a Notice Of Default that will appear three consecutive weeks in the local paper announcing when your foreclosure auction is scheduled.
How long you can stay in your house after it is sold in auction depends on the state where you live. At some point, however, you will need to find a new place to stay.
Fortunately, you have options!
If you wait until your home is foreclosed, it will have a devastating effect on your credit score. This is a bad thing for you now and in the future, it effects everything about you financially. One option to protect yourself is to work out an arrangement with the loan company called a “deed in lieu of foreclosure”.
This is when you hand over the ownership of the house to the loan company so that they save the money they would spend on foreclosure process. In turn, you get to avoid having a foreclosure listed on your credit rating.
You can also avoid foreclosure by selling your house before it make sit to the auction block. If your loan is paid in full then there will be no more penalties against you and your credit score will actually improve. If you owe more that what the house is worth then you in most case can do a short sale. The idea is have the bank agree to this so they will forgive the debt.
Here’s an example: Let’s say you owed $100,000 on your home and you sold your home to us for $90,000. You would give that money to the loan company. We would need to negotiate with the bank on your behalf to have them forgive the $10,000 need to make up the short-fall, and your loan would be paid off.
I want to avoid giving my house back to the bank in Murfreesboro!
Why do people choose to sell their home instead of going through foreclosure?
Well, having to sell a home can be difficult but the impact on your credit is considerably less than if you choose to allow the foreclosure to happen. In fact, going through foreclosure could impact your credit score by as much as 100 to 150 points. So the short-term challenge of selling your house is still a way better choice than the long-term pain of giving your house back to the bank.