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Foreclosure can be a very stressful time for homeowners. Many people have a misconception about homeowners who are facing foreclosure. What people don’t realize is that it’s typically a multitude of things that contribute to a homeowner falling behind on mortgage payments. It’s not as simple as the homeowners just stopped paying their mortgage. Often it is a domino effect from many misfortunes occurring at a rapid pace, then continuing in a downward spiral.
Having dealt with hundreds of homeowners in jeopardy of losing their home to the bank, I’ve come across many, many, many different situations. These homeowners are good people, just like you, who just had a bad chain of events.
I recall having homeowners giving me a “play by play” of how they wound up into the situation they were in. Job loss followed by a divorce shortly after, having only one person contributing to the mortgage instead of two becoming unmanageable, taxes for the upcoming quarter don’t get paid as the homeowner struggles to find work. Lack of money causes the home to be neglected and becomes in need of repairs, months progress and eventually the mortgage payments become too much to handle. After falling a few months behind, it’s virtually impossible to catch up the back payments and the bank starts their relentless pursuit into taking their home from them.
Many homeowners have the same questions regarding foreclosure in new jersey and the foreclosure process. I’ve compiled a list below to help to arm you with information so you can make an educated decision on what route is best for you.
How can I stop the bank from taking my home?
The best way for you to prevent the bank from stealing your home is to “do something“. Research and educate yourself as much as possible, then once you’ve chosen a particular avenue make sure to take action. By doing nothing, you limit the options available to you as you approach the foreclosure sale date. This post is a good start in educating yourself about preventing foreclosure in New Jersey.
What are my options when facing foreclosure?
Generally speaking, you can:
1. Try to work something out with the bank
2. Catch up back payments, make the loan current and keep your home
3. Sell your home
Option 1 might be viable if your lender is flexible. Most often your best shot at this is when you’re not that many months behind. Your lender might be able to provide a few options and some of which might be a forbearance, loan modification, loan restructure, etc. These might entail modifying your existing loan or putting the missed payments at the back of the loan to be paid off later.
Option 2 might be viable if you can get access to some money. Sometimes family members and friends are willing to assist, or perhaps you have a retirement plan (401k or other) that you can tap into. Please note, these are just possible options, I’m not recommending that these are great alternatives but it’s important to know they are in fact possibilities.
Option 3 is always an option if 1 & 2 are not possible and you don’t want your home to be foreclosed on. I acknowledge that you probably would like to keep your home, and this is most likely not your first choice, however, if you’re in a situation where the home will ultimately be sold at the court house steps, then at least you can plan for a less harmful route.
If decide to sell your home, then you can either sell to an investor or list your home with a realtor. Another factor to be determined is how you are going to sell your home.
Do you have equity? If you have equity you may still realize profit from the sale. If you don’t have equity you might be looking a short sale or some other type of creative solution.
Should I list with a realtor or sell to an investor?
This is another great question and the answer depends on a few things. How much time do you have until the sheriff sale date? Do you have any equity? If you have equity, you have more options available to you. Listing with an agent might be a good idea if you have a decent amount of time before the sale date and if you have a good amount of equity. This will allow you to pay off the bank, the listing agent, and still profit from the sale (assuming the house is in decent shape).
This route will also give you the best chance of finding a buyer willing to pay the most for your property due to the outreach the Multiple Listing Service (MLS) provides.
If you don’t have any equity, the most common solution is a short sale. With a short sale, the home will most likely be listed with a realtor as per your lender’s requirements.
If, on the other hand, you have little time you might consider selling to a cash home buyer company. A cash buyer can close extremely fast on a property because they do not need a loan from the bank.
If you’re facing a short sale situation, you can still work with a cash home buyer (investor). They can provide a cash offer on your property immediately and work closely with a realtor who lists the property. One advantage to going this route is that you won’t have to wait months for an offer to be made and the short sale process starts from day 1.
Will I have to pay any real estate commission if I do a Short Sale?
You will not have to pay any real estate commissions if you do a short sale. This is paid by the lender.
What is the process of foreclosure?
The foreclosure process in New Jersey (judicial foreclosure) is a lengthy one. If you do a Google search, you will find sources saying the foreclosure timeline in New Jersey is 6-9 months. Currently this is not the case.
With the amount of foreclosures in New Jersey, the foreclosure process can take upwards of 2-3 years. There might be some exceptions but this is what we have been seeing over the past few years.
How does it impact my credit? Will I ever be able to buy a house again?
This is a great question that should be discussed with a mortgage consultant since this can vary. Some sources claim that with a short sale you’ll be able to purchase a home again in about 2 years vs 5-7 years with a foreclosure. It’s best to consult with a mortgage broker for more details on this subject.
Is Bankruptcy an option?
Bankruptcy (BK) is another option, however, I believe this route should be thoroughly investigated beforehand . Many homeowners opt for this route in hopes it will save their home, but unfortunately, most often it only delays the foreclosure process. This ends up hurting your credit more because you now have bankruptcy AND a foreclosure/short sale on your credit. The problem is there aren’t many bankruptcy attorney’s that will tell you bankruptcy is not a good option.
To be honest, I have yet to find a single homeowner that was told by a BK attorney, it wasn’t a good option for them. Furthermore, many of the homeowners that have filed BK ended up losing their home to foreclosure anyway.
Will I owe anything?
If you sell your home and pay off all liens you won’t owe anything. If you sell your home via short sale, there are some situations where you might be liable for the difference (deficiency judgment) or perhaps taxed on the “forgiven” amount. Further information on the Mortgage Forgiveness Debt Relief Act and Debt Cancellation can be found here: http://www.realtor.org/topics/mortgage-debt-cancellation-relief.
Please note, when we buy a short sale from homeowners like you, we make sure the lenders agree to waive their right to seek deficiency judgment.
Do I get anything if I lose my home?
If you’re home has equity and it’s sold at the sheriff sale you might get some money after all fines and liens are paid off. If you have no equity you will not receive any money if your home is sold at the sheriff sale.
When you short sale your home the lender will not let you profit, however, it is not uncommon in today’s market to receive some moving expenses from the lender. This is not guaranteed and really depends on the lender and your situation.
How long is the process?
Please see above for foreclosure timelines. In regards to timelines for short sales, the length varies greatly. Due to the current influx of foreclosures in New Jersey some short sales have lasted beyond the 2 and 3 year mark. This can happen with the banks that are inundated with foreclosures and don’t have the staff to handle the processing quick enough. Some short sales have been completed in as little as 3o days. This isn’t too common but is sometimes possible with smaller banks or one’s who have less defaulted mortgages on their books.
How soon would I have before I got kicked out?
If you lose your home to foreclosure, the sheriff will issue a writ of possession. The amount of evictions and available people on staff in that county will determine how quickly the lender takes possession of the home. It can take a matter of days to a matter of weeks.
If you’re looking to sell your home fast in New Jersey, we can help. Whether you have a little bit of equity, a lot of equity, or no equity, we can still purchase your home.
We are New Jersey’s #1 cash home buyer. We buy homes AS IS so you never have to make any repairs. You’ll also never pay any real estate commissions, regardless if your home is listed as a short sale or purchased outright.
Contact us today, We’ll buy your house with a few clicks of a mouse!