Life happens, we get that. We work with homeowners in Indianapolis and surrounding cities every day who face financial challenges that threaten their way of life and their homes. Depending on where you live, foreclosure could take upwards of one year. But don’t let that fool you into thinking that you have time to sort things out. While you are trying to figure out how to make the next mortgage payment, your bank is working hard to take your house. If you want to avoid foreclosure continues reading.
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With each passing day, your bank is investing more and more money in legal and processing costs of foreclosure. The more they spend the less willing they are going to be to agree on any foreclosure alternatives. Many times we can simply pay off the mortgage balance, depending on what the balance is and the fair market value of your house. When equity is limited, we have other solutions we can employ to help you get out from underneath your house.
You can file for bankruptcy to avoid foreclosure, sell your house short or what’s called a “short sale,” or you can sell your house fast either through an accelerated listing or directly to a real estate investor.
There are benefits and drawbacks associated with each. Filing for bankruptcy protection or selling your house in a short sale will negatively impact your credit. Bankruptcy tends to hit your credit a little harder but both will hurt your chances or purchasing a new house or even renting a house.
When selling your house in a short sale, you could be held responsible for your loan balance being forgiven. A short sale is simply asking the bank to accept a lower amount than what is owed to settle the mortgage.
Let’s say you owed a bank $100,000 but are unable to pay the monthly mortgage. In a short sale, you and your bank agree that the mortgage can be settled for $80,000. This allows a buyer to purchase the house at a discount and relieve you of the financial burden. However, many banks today are filing 1099s against the homeowner for the balance of the mortgage. What this means for you is that you will be responsible for paying taxes on the $20,000 since this is considered to be income according to the federal government. Depending on what tax bracket you are in, this can be a costly solution.
You may be advised to file bankruptcy but often times this action only delays the foreclosure process. While filing a bankruptcy action may buy you some time, your house could still be foreclosed on and sold at an auction unless you bring mortgage payments current. It’s important to understand how bankruptcy will affect your credit before you proceed. Bankruptcy hits your credit pretty hard and can prevent you from being able to purchase a new home for up to seven years. Filing bankruptcy can also make it difficult to rent a house or apartment.
At Ittenbach Capital, the Midwest’s premier home buying company, we understand the complexities that come with avoiding foreclosure. We have the experience and knowledge to help you avoid foreclosure and get rid of your house in Indianapolis fast. We can pay cash for your Indianapolis house, settle your mortgage balance and help you get out from underneath the burden of your mortgage.
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