Q: What does foreclosure mean?
A: In dictionary.com it says that to foreclose is to deprive you, the mortgagor, of the right to redeem mortgaged property when payments have not been made. When you have missed a payment, you have defaulted on your loan, but you are not yet in foreclosure. In Colorado, the foreclosure proceedings will not initiate until the mortgage lender or bank submits paper work to the county trustee and a notice of their intent to foreclose is sent to you.
Q: What can I do?
A: This depends on what point in the foreclosure process you are. Once the mortgage lender sends letters informing you of the foreclosure, most of the time your options are extremely limited. This is why it si so important to do something early, before it gets that far.
Assuming that you can't catch the payments up immediately, your best option is to negotiate with your lender to add the missed payments on to the end of the loan and start fresh. If they won't do this, your next best option is put it on the market to get it sold as soon as possible.
Once you are behind more than about 3 payments, there are very few lenders who will give you a loan to refinance, so selling is usually your best option. If you do sell and your lender must take less than what is owed to them in order to sell, make sure you contact an EXPERT in short sale negotiations such as Colorado Homes, LLC or another very experienced real estate broker. Short sales are an extremely advanced form of real estate and if your broker is not experienced, you could easily end up in foreclosure even though you caught it early and got it on the market quickly.
Q: Who do I turn to?
A: You can talk to your mortgage lender about your options with payments adjustments, another loan, etc. If you decide to sell the house, there are always local investors who can help you get your feet back on the ground... but BEWARE!!! Many investors want you to remain on the loan while they take title to your home. This is a ligitimate way to sell, but you need to know that you remain responsible for the loan even though you sold the property to the investor. If you decide to sell your home make sure you are getting help from credible sources and of course don't ever sign anything before reading it.
Q: When do I have to leave the house if I get foreclosed on?
A: Laws vary from state to state; but in Colorado, you have 75 days from the date of the sale, called the Right of Redemption Period, to either pay the bank in full for what is owed including foreclosure costs, or to vacate.
Q: Does the lender have the right to repossess my home, even though I have been paying for it all this time?
A: Unfortunately, yes. Even though you only missed those few payments and had paid so many others, the deed of trust gives the lender the right to foreclose and repossess the property after you have defaulted on payments for a certain length of time.
Q: How can refinancing help me out of foreclosure?
A: When you refinane, you are essentially taking out a loan to pay off your existing loan. The new loan is based off a new appraisal of your property. One of the benefits of refinancing is that you can sometimes get a lower interest rate, in turn, decreasing your monthly mortgage payment. Another is that you can "skip" a payment... Ex- You refinance at the end of a given month and the payment on the new loan doesn't start until the month AFTER the next, so you would have a month where you had no mortgage payment.
Q: If I lose my house in foreclosure, can I ever buy again?
A: If you apply for a loan on another house, your past foreclosure will show in your credit history for 7 years. This does not mean you will not qualify for a loan; however you are less likely to receive, for instance, a low down payment loan or a favorable interest rate.
It is very important to stay informed and knowledgeable in how to stop the Foreclosure before it happens. There are people who are willing to take the time and help such as Colorado Homes, LLC and The Loan Pros, Inc.
