If your situation progresses too far, you may be forced into the unfortunate situation of having to give your house back to the bank or selling your house fast before foreclosure in Michigan. This could leave you temporarily without a place to stay. In addition, there may be long-term consequences, including a dramatic and long-lasting impact to your credit and your ability to get a house in the future.
No one wants that. That’s not an ideal outcome. Fortunately, there are some strategies you can employ to make the best of this difficult situation.
The Process of Giving Your House Back to the Bank in Michigan
The foreclosure process can vary depending on location and the type of mortgage you have. Usually, if you miss a few mortgage payments, your loan company will start sending you notifications and warnings. Over time, if you fail to pay back the mortgage payments you missed, the loan company may put your home up for public auction.
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 can have a devastating effect on your credit rating.
Work out an arrangement with the loan company called a “deed in lieu of foreclosure”
This is when you hand over ownership of the house to the loan company so that they save the money they would spend on foreclosure proceedings, which can be significant. You get to avoid having a foreclosure listed on your credit rating, which can be a huge help in the future.
Selling your house fast before foreclosure
If your loan is paid in full then there will be no more penalties against you and your credit rating. If your loan isn’t paid in full, you will need to make up the difference.
Here’s an example: Let’s say you owed $100,000 on your home and you sold your home for $90,000. You would give that money to the loan company, along with $10,000 to make up the short-fall, and your loan would be paid off. If you contact a real estate attorney, you may be able to negotiate a deed in lieu of foreclosure deal in which the loan company agrees not to go after the difference in exchange for the deed to the house.
At Cash Buyers Macomb, we’re professional real estate investors. Contact us today at 586-307-4330 to find out what we can offer you for your house. We’ll buy it in ANY condition, and we can do it quickly.
Why do people choose to sell their home instead of going through foreclosure?
Well, losing a home can be difficult but the impact on your financial situation and your credit is considerably more than that. 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 better choice than the long-term pain of giving your house back to the bank.
Additionally, selling your house before foreclosure allows you to have more control over the process. When your home is foreclosed upon, the bank or lender is in charge of the sale and you have no say in the process. By selling your home before foreclosure, you can negotiate with buyers and potentially get a better price for your home.
There are also potential tax implications to consider when giving your house back to the bank or going through a foreclosure. If the sale of your home does not cover the amount you owe on your mortgage, you may be responsible for paying taxes on the difference. This is known as a deficiency judgment. By selling your home before foreclosure, you may be able to avoid this tax liability.
Selling your house before foreclosure can also be a better option for your future homeownership plans. It may be easier to qualify for a mortgage in the future if you sold your home rather than going through a foreclosure.
Wrapping Up – Giving Your House Back to the Bank or Selling Before Foreclosure
If you are struggling to make mortgage payments and are considering giving your house back to the bank or selling your house fast before foreclosure in Michigan, it is important to explore all of your options and seek the advice of a financial professional or real estate attorney. They can help you understand the consequences of each choice and help you make the best decision for your situation.