Local Raleigh NC homeowners who are going through tough financial times may find themselves facing foreclosure.
What is Foreclosure?
Foreclosure is the process by which a lender can take ownership of a property and sell it to pay the outstanding balance. In simple terms, its the bank’s way of saying: “You don’t pay, you don’t stay.”
There are certain steps to foreclosure that are unique to North Carolina that we will not get into here.
But, if you find yourself entering the foreclosure process, you might wonder if there is anything you can do about it.
In this blog post, you’ll read about a few foreclosure prevention measures in Raleigh.
Foreclosure prevention measures in Raleigh NC
1. Pay off your mortgage / sell your property. The quickest and easiest way to end the foreclosure process is to pay off your mortgage. At the end of the day, the bank just wants their money. If you are facing foreclosure the odds are that you don’t have a chunk of money lying around to pay off the balance.
The easiest way to pay off your mortgage is to sell the house for cash.
2. Work out a deal with your bank. Sometimes you can work out a deal with your bank where you get in contact with the loss mitigation department and see if they can restructure your loan. Perhaps your payments get spread out so they are lower each month, for example. Just make sure that the deal works for you.
3. Do a short sale. A short sale is when you sell the property for less than what is owed on your mortgage. It’s a way to get a burdensome house off your back. However, this will negatively impact your credit and it can result in a deficiency judgment down the road.
4. Deed in lieu of foreclosure. Another option would be a deed-in-lieu-of-foreclosure, which means that you surrender the deed to your house to the bank and they agree not to foreclosure.
While this is an option to consider, I have not seen this happen very often in the North Carolina market. The foreclosures that I have observed are either done very quickly, in under 90 days, or they drag on indefinitely while the bank will hammer the borrow with collection calls.
5. File for bankruptcy. In some ways, a bankruptcy is far more dramatic than a foreclosure because it impacts your whole life. However, once you file for bankruptcy, the foreclosure process has to stop so it’s still a foreclosure prevention measure. The other advantage is that you can stay in the home during the bankruptcy proceedings.
If you’re not sure which one to do, consider this: If you can afford payments and you want to stay in the house then a foreclosure workout arrangement (#2) is probably your best option.
If you want to put everything behind you and move on with your life then consider selling your home and paying off your mortgage with that money.