Foreclosure - The Final Frontier (or is it?) Here are your options:

The likelihood of there being a large-scale foreclosure in the U.S. is next to none however it is still a reality for a number of homeowners who are coming face-to-face with foreclosure as a possibility. As shown by the graph below, the risk of undergoing foreclosure is decreasing over time although this data does nothing to those who are already facing those challenges now. Thankfully there are some steps you can take to further reduce the risk.

For starters, taking advantage of the forbearance period has allowed many homeowners a breather while they step back and weigh their options. Awareness of the situation is the first step in taking back control, so we dive into the fire by getting a better understanding of what foreclosure is. Investopedia defines it like this:

Foreclosure is the legal process by which a lender attempts to recover the amount owed on a defaulted loan by taking ownership of and selling the mortgaged property. Typically, default is triggered when a borrower misses a specific number of monthly payments . . .” 

Thankfully there is a built in lifevest and there are alternatives available to help you avoid having to drown in the foreclosure process, including:

Your first step will involve some digging. It’s worth seeing if you have enough equity in your home, this could mean the difference between walking away with a loss or protecting your investment.

Understand Your Options: Sell Your House

Equity is defined as the difference between what you owe on the home and its market value based on factors like price appreciation.

Due to the recent changes in market conditions, many homeowners are sitting on far more equity than they realize. Buyer demand continues to surge higher, coupled with housing supply being at an all time low and you get a substantial increase in home values. When prices rise, so does the amount of equity you have in your house.

CoreLogic has found that on average, homeowners gained $33,400 in equity over the last 12 months, and the average equity on mortgaged homes is now $216,000 (see map below):

So, how can you utilize this information? 

Chances are your home’s value has reflected the changes in market conditions and  your equity has risen dramatically. Timing is your friend here and the longer you’ve been making payments, the more you’ve chipped away at the balance of your loan. If your home’s current value is higher than what you still owe on your loan, you may be able to use that increase to your advantage.

Frank Martell, President and CEO of CoreLogic, elaborates on how equity can help:

Homeowner equity has more than doubled over the past decade and become a crucial buffer for many weathering the challenges of the pandemic. These gains have become an important financial tool and boosted consumer confidence in the U.S. housing market.”

Don’t Go at It Alone – Lean on Experts for Advice

To find out what your house is worth in today’s market, work with a local real estate professional. We’ll be able to give you an estimate of what your house could sell for based on recent sales of similar homes in your area. Since home prices are still appreciating, you may be able to sell your house to avoid foreclosure.

If you find out that you have to pursue other options, your agent can help with that too. We’ll be able to connect you with other professionals in the industry, like housing counselors who can look into your unique situation and offer advice on next steps if selling isn’t the best alternative.

Bottom Line

If you’re a homeowner facing the grim possibility of losing your home, by learning more about your options you are able to overcome the challenge and turn it into a big advantage. Let’s connect to get you in front of the right information. 

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