Life can sometimes change on a dime, and so can your financial well-being. If you are suddenly at risk for foreclosure, it is important to act quickly and communicate with your mortgage lender about your current situation.
Identify your Risk for Foreclosure Early on
Taking control of the situation early on to avoid foreclosure is critical. If you have recently gone through a divorce, career change, have been injured, or have faced any other income-damaging event, it is time to reevaluate your income and expenditure.
If you keep a budget sheet or use an app that tracks your monthly income and expenses, this can be easily done. However, not having this info readily available with previous months recorded can add time and difficulty to evaluating your risk of foreclosure. Your best bet will be to review your bank statements from previous months.
A general rule of thumb to follow is the 50/30/20 rule. This can be stretched a bit, but generally, it is how you should dedicate your income:
- 50% to needs - such as housing, groceries, and utilities
- 30% to wants - such as hobbies, restaurants, and trips
- 20% to savings
Of course, depending on your specific situation, you may be able to float on a higher percentage dedicated towards needs. Generally, if more than 70-80% of your income becomes dedicated towards needs, you are at risk of missing payments (and eventually foreclosure).
Identifying your risk for foreclosure will give you more options when deciding to sell your home. Selling homes can take time, and your options become more limited if you need a quick influx of cash.
Ask Your Lender for Forbearance
If you have determined you are at risk of foreclosure, your first step should be to speak with your mortgage lender. Approaching them with a forbearance request can extend the time you have to sell the home. While this may seem like an unlikely long shot, many lenders want to avoid foreclosures, as they often carry more risk for the lender than the owner.
When asking your lender for a forbearance, it is important to:
- Be honest – tell the lender the exact, current financial situation.
- Inform them of your intent to sell.
- Have a “For Sale” plan ready with an approximate timeline.
There is a possibility that the lender will refuse a forbearance, but it is always worth asking.
List it Low, if You Have Time
If you manage to receive a forbearance from your lender or if you have enough savings built up to float for a few months, then selling your home through traditional means may be an option. However, when facing potential foreclosure, it is not wise to attempt to receive the maximum amount possible out of your home. Listing the home below market value will help encourage a quicker sale and attract more offers – sometimes even cash offers from home-buying companies like WCC Properties!
Unfortunately, the traditional means of selling a house can take several months, even if you list low. This is especially true for homes that require repairs or remodeling. Higher interest rates have also slowed the market. Long gone are the days of accepting offers within the day of listing the house.
Finally, traditional sales require realtors. On top of listing your home for lower than usual, you will also have to pay realtor fees when selling your home traditionally. Combined with closing costs, this can start to add up and take away money you need to avoid forbearance.
Consult WCC Properties for a Quick Sale
Traditional home-selling and negotiating with your lender can be more of a headache than it is worth. This is where WCC Properties can step in with a quick solution. With just one call, we can view your home and give you a cash offer within 24 hours to buy your home as is. Our solution is quick, efficient, and saves you money on realtor fees and closing costs, all while offering a fair deal!
WCC Properties is the quickest way to sell your home in a pinch. So, if you need a quick sale to avoid foreclosure, we’re the way to go!
