Foreclosure Vs Short Sale: What To Know Before It’s Too Late

Colby Hager on October 24, 2022

Foreclosure Vs Short Sale: What To Know Before It's Too Late

If you have been missing payments and have fallen behind on your mortgage, you may be wondering what your options you have to avoid foreclosure. This article will compare a foreclosure vs a short sale, how they are different and what the ramifications are for the homeowner.

We will also cover the other options besides a short sale to avoid foreclosure.

What Is A Home Foreclosure?

A foreclosure is when your lender repossesses your home because you have defaulted on your loan. This usually happens after several missed mortgage payments, and the lender will initiate a legal proceeding called foreclosure.

The foreclosure process can take months or even years to complete, during which time you will be required to maintain the property and pay any outstanding taxes and insurance. Once the foreclosure is finalized, you will be evicted from the property and will no longer own it. The foreclosure will also stay on your credit report for up to seven years, making it difficult to buy another home or get new lines of credit.

What is A Short Sale?

A short sale is when you sell your home for less than the amount you owe on your mortgage. This is usually only an option if you are facing foreclosure, as most lenders will not agree to a short sale unless they are about to foreclose on the property.

Short sales take a lot of time, require patience and persistence, and can be complicated depending on the lender.

A short sale can damage your credit score, but not as much as a foreclosure. Additionally, a short sale will stay on your credit report for up to seven years.

What is the Downside Of A Shortsale?

The biggest downside of a short sale is that you will still owe the difference between what you owe on your mortgage and the amount the home sold for. This is called a deficiency judgment, and the lender can pursue you for this money through a lawsuit. Additionally, the IRS may treat the forgiven debt as income, so you may owe taxes on the forgiven debt.

Secondly, a short sale will still damage your credit. Many people think that because they are avoiding foreclosure by using a short sale, their credit won’t be damaged however, this is not the case.

Also, a short sale is very time-consuming. During this time, your payments are still due, you are still accruing late fees, and there is always the chance that the lender will reject the short sale proposal and move forward with foreclosure.

How Does A Short Sale Work?

A short sale occurs when the lender agrees to let you sell your home for less than what is owed on the mortgage. For example, if you owe $200,000 on your mortgage and your home is only worth $160,000, you may be able to do a short sale.

In order to get approved for a short sale, you will need to provide the lender with documentation that proves you have a hardship and are unable to make your payments. This could be due to job loss, medical bills, divorce, or any other financial hardship.

Typically, there have to be other factors at play beyond just a hardship. You have to demonstrate that the property is truly worth less than the mortgage amount. This is normally done by proving that the property is in need of significant repairs.

Once the lender approves the short sale, they will set a date for the closing. At closing, you will sign over the deed of the property.

Short Sale vs. Foreclosure and What's the Difference?

The main difference between a foreclosure and a short sale is that with a foreclosure, the lender takes back the property and sells it at auction. With a short sale, you sell the property and the lender agrees to accept less than what is owed on the mortgage.

A foreclosure will damage your credit more than a short sale and will stay on your credit report for up to seven years. A short sale will also damage your credit but not as much as a foreclosure, and it will stay on your credit report for up to seven years.

Another key difference is that with a foreclosure, you will still owe the deficiency judgment to the lender. With a short sale, you may still owe taxes on the forgiven portion of the loan.

Options For Avoiding Both Short Sale and Foreclosure

If you are facing foreclosure, there are a few options you can pursue to avoid having to do a short sale and possibly even some options to prevent a foreclosure at the last minute.

Loan Modification

A loan modification is when the lender agrees to change the terms of your loan to make it more affordable. This could involve extending the term of the loan, reducing the interest rate, or changing the type of loan.

Bankruptcy

Filing for bankruptcy will stop the foreclosure process. There are two types of bankruptcies that can help if you are facing foreclosure: Chapter 7 and Chapter 13.

Chapter 7 bankruptcy will eliminate most, if not all, of your debts. However, you may have to give up some of your assets, including your home.

Chapter 13 bankruptcy will allow you to keep your assets, but you will have to repay your debts over time. This repayment plan will last for three to five years. During this time, the foreclosure process will be put on hold.

Deed in Lieu of Foreclosure

A deed in lieu of foreclosure is when you give the property back to the bank in exchange for them forgiving the debt. This option is often used as a last resort because it will still damage your credit.

Sell Your House to an Investor

Selling your house to an investor is a great option if you are facing foreclosure. An investor will buy your house as-is for cash, so you don’t have to worry about making any repairs. Plus, you can close on the sale in as little as seven days.

Selling Your House and Getting Cash From Capstone Homebuyers

Of all the options, selling your home to an investor is usually the best choice. This is because you will be able to sell your house quickly, without having to go through the months-long process of a short sale or foreclosure.

You also won’t have to worry about owing any money after the sale, as you would with a short sale, and you won’t have to deal with the damage to your credit that comes with foreclosure.

Additionally, when you sell your home to an investor like Capstone Homebuyers, you can get cash for your house. This can be helpful if you are facing other financial hardships in addition to your mortgage payments.

If you are facing foreclosure and aren’t sure of your options even if you recently inherited the house with back payments, give us a call to see how we can help!

Understanding The Beginning of the Foreclosure Process In Texas

Colby Hager on September 1, 2022

Understanding The Beginning Of The Foreclosure Process In Texas

One of the most difficult experiences a homeowner can go through is foreclosure. It can be financially and emotionally devastating, and it can damage your credit for years to come. If you’re facing foreclosure in Texas, it’s important to understand the process so that you can take the necessary steps to protect your rights.

If you wait too long, you may find yourself in a situation where you are unable to sell your property and are forced to move out. With this in mind, it is important to be aware of the foreclosure process in Texas so that you can take action to prevent it from happening to you.

The Beginning Steps To A Foreclosure In Bexar County

The first step in the foreclosure process is known as pre-foreclosure. This is when the lender sends a notice to the borrower informing them that they are behind on their payments and that they need to catch up within a certain period of time or face foreclosure.

If the borrower doesn’t catch up on their payments, the next step is a Notice of Default and Intent to Accelerate, which is sent by the lender informing the borrower that they have failed to make their payments and that they have 30 days to catch up or face foreclosure.

If the borrower still doesn’t make their payments, the next step is a Notice of Acceleration and Posting of Foreclosure, which is sent by the lender informing the borrower that their home will be sold at a foreclosure auction in 21 days. At this point, the borrower has two options: they can either try to sell their home to prevent foreclosure or they can let their home be sold at auction.

What Is A Pre-Foreclosure In Texas?

When a homeowner misses 3-6 months of mortgage payments, the lending institution will issue a warning, notifying the homeowner to pay or lose their home. This period is known as “pre-foreclosure.”

Banks and mortgage lenders typically provide three months for the homeowner to become current. Of course, this number can vary by bank and situation sometimes.

If a homeowner fails to make the necessary payments, the bank will foreclose on the home, assuming ownership, and evict the homeowner. Thankfully, during this stage of the foreclosure process, a mortgage holder has the opportunity to take advantage of several options to prevent losing their home.

What Is A Notice of Default?

The “Notice of Default and Intent to Accelerate” gives formal notice about the borrower’s default. This allows them an opportunity (at least 20 days) for curing it, although most substitute trustees handling foreclosures for banks in Bexar county feel that 30 days to cure is the safest way to ensure a proper foreclosure is being conducted.

The notice of default is a very important step within the foreclosure process that gives people with an interest in the property to step forward and claim their rights – before it’s too late. If you’ve received a notice of default, don’t wait. Time is definitely of the essence, and you should take action.

Options Available To Homeowners At The Beginning Of The Foreclosure Process

You may be able to quickly sell your home to a reputable real estate investor in San Antonio TX like Capstone Homebuyers

We use cash to pay the months of back-payments owed (or we *may* be able to work out something with the lender that relieves all or part of your back payments). We can buy your San Antonio area home quickly, often in just a week or two, will pay in cash, and takes the stress out of trying to find a buyer.

You can contact the bank and ask them to permit a short sale

In a short sale, you’ll sell your home for less than it’s worth, and the bank will take the loss as a tax write-off. In some short sales, you may still be required to pay the difference to the bank if the house doesn’t sell for what is owed on the loan.

You may be able to declare bankruptcy

Bankruptcy can buy you time to pay your debt. Bankruptcy will remain on your credit report for years and can cause significant damage. There are some risks that go along with this strategy so make sure you understand the pros and cons of filing bankruptcy to avoid forclosure.

Request a loan modification

This is when the bank will allow you to wrap your back payments into your loan or tack them onto the back end of your loan. While this option can save you from moving closer to a foreclosure, it can be costly at the end of your loan.

Be Aware Of Foreclosure Scams

If you’re in foreclosure and are looking for a solution to avoid foreclosure and get foreclosure help in Bexar County TX, here are some “solutions” some less-than-honest companies may offer and what you need to watch out for.

Charging upfront fees to get mortgage assistance from lenders. Fannie Mae says, help is free. Some companies will try to charge you for talking with your lender about your mortgage to find a solution. Don’t fall for it; this is one of the classic foreclosure scams. You can talk with your lender about the mortgage and your options anytime with no charge, or work with a company that will do your loan counseling for you for free.
Signing over the deed to your home at your kitchen table. Never sign over the deed to your house unless you’re working with your mortgage company to forgive your debt… unless you’re physically selling your house to that company. If that’s the case, ask the company to do everything at a reputable attorney's office so everything is on the up and up (always consult legal advice before ever signing over your deed).
Try to say you don't need to work with a professional or have an attorney handle the paperwork. Selling your house, whether you’re in foreclosure or just need to sell quickly, should be done with the help of certain professional services. With every house we buy, we always use a neutral 3rd-party title company to handle the closing, drawing up the closing documents, and all related paperwork.

Sell Your House To A Reputable San Antonio Based Company

You’re about to lose your home and you don’t know what to do. You’ve tried talking to your bank, but they won’t help you.

We can help people avoid foreclosure at the last minute. If your house is facing foreclosure in days, we have solutions that can help you prevent foreclosure.

Foreclosure doesn’t have to be inevitable. Capstone Homebuyers offers solutions that can help people save their homes at the last minute. Contact us today for more information.

Ways To Stop Foreclosure Last Minute

Colby Hager on August 13, 2022

Ways To Stop Foreclosure Last Minute

If you are facing a foreclosure and you waited too long to take steps to avoid the foreclosure, you might find yourself thinking of last-minute ways to stop the foreclosure. If you are about to lose your home and you don’t know what to do, we can help with solutions so that you can avoid foreclosure. Find out the quickest options to stop a foreclosure before the auction at the courthouse steps.

This can be a stressful situation, but it’s extremely important to keep your wits about yourself. A foreclosure will have a huge negative impact on your credit score, and likely prevent you from purchasing a home for several years. If you sell your home using a short sale, you could leave a portion of the loan unpaid, and the lender could pursue legal action against you for the unpaid portion.

Use A Temporary Restraining Order To Stop A Foreclosure

If you are in the very last stages of the foreclosure process, you might be able to stop a foreclosure sale by filing for a temporary restraining order (TRO). This would stop the sale of your home, giving you more time to figure out what to do. However, it’s important to note that this is option is not without challenges.

An attorney will have to file a lawsuit against your lender. A judge will have to approve the TRO as well. Most attorneys need at least a couple of days to start this process. This process can be cost-prohibitive as well. Many attorneys charge several thousand dollars to initiate this process.

Additionally, a temporary restraining order to stop foreclosure is sometimes viewed as risky for the homeowner. While the risks may be rare and seem improbable, you have to know they do exist. Because you are going to sue the lender, you cannot file a false or frivolous lawsuit. There can be penalties involved if this is determined to be the case.

If you are working with a reputable home buyer to help you stop the foreclosure, they will likely guide you through this process if it is a viable option and may even pick up the attorney fees.

File For Bankruptcy To Avoid Foreclosure

Filing for bankruptcy to stop a foreclosure isn’t something most people think of right away. However, if you have a few days before the auction date, this may be an option. A qualified bankruptcy attorney will guide you through the process of which bankruptcy option is right for your specific situation.

If you are in personal bankruptcy, Chapter 7 may be the ideal option. Under this chapter, debtors must liquidate assets that they can no longer afford to pay off or maintain. In most cases, filing for Chapter 7 will stop foreclosure immediately as it is considered an automatic stay.

Chapter 13 bankruptcy might also be an option depending on your situation. No matter which route you choose or are advised to take, the attorney’s fees can be costly and there is always the risk of your property not being covered by the bankruptcy. However, if you are just looking for an extra month or two in the property, this can be an option to prevent a foreclosure.

Sell Your House To A Reputable Cash Homebuyer To Avoid Foreclosure

Selling your house to a local investor who buys houses can be an option if you need to stop foreclosure within 24-48 hours. Some serious real estate home buyers have the ability to stop a foreclosure lightning-fast by purchasing the house and getting the bank paid off before they can go through with the foreclosure at the auction.

Another benefit of selling your house to a cash home buyer is that you won’t have to shell out thousands to an attorney to prevent the inevitable. These investors are able to offer some great deals because they have access to private funding and cash that allows them to move fast enough to help you avoid foreclosure altogether.

One of the biggest challenges is finding a reputable home buyer. You will want to seek recommendations from friends and family, check online reviews, and do all of your research so you can work with the homebuyer who is the best fit for your and your situation.

How Capstone Homebuyers Can Help

Foreclosure is a scary word and it can feel like there’s no way out. You might be thinking, “I don’t want to lose my home,” or “How will I afford a new one?” You’re not alone. Tens of thousands of homeowners are in the same boat as you every year.

We understand that you may be feeling overwhelmed, but we want to assure you that there is hope. Capstone Homebuyers is here to help you find a last-minute solution to your foreclosure problem. We work quickly and efficiently to get you back on track. Our team has years of experience helping homeowners just like you get back on their feet and we can help you too. Contact us today for a free consultation.

Can Bankruptcy Be Used To Stop Foreclosure In Texas?

Colby Hager on April 15, 2022

Can Bankruptcy Be Used To Stop Foreclosure In Texas?

Can banruptcy be used to stop foreclosure in Texas? Yes. Bankruptcy can be used to stop foreclosure in Texas and bankruptcy is often used as a tool by homeowners in order to prevent a foreclosure. Using bankruptcy to stop foreclosure is a powerful tool but can often be costly. Many homeowners who are facing foreclosure see bankruptcy as a way to stop foreclosure without thinking about what happens after they file for bankruptcy. If you enter into bankruptcy without a plan or without a solid long-term strategy, it could backfire. At Capstone Homebuyers, we have been buying houses in bankruptcy and helping homeowners stop foreclosure for years in San Antonio Texas and we are ready to help if needed.

How Long Will Bankruptcy Delay Foreclosure

Bankruptcy can delay a bank foreclosure for years if successful. Bankruptcy can delay a foreclosure by a month or two if it is used by a homeowner only as a means of stopping foreclosure.

Different types of bankruptcies come with different types of rules. If you are looking for a long-term strategy, entering into bankruptcy can buy you three to five years. This is assuming you make your monthly payment arrangements created during your bankruptcy hearings. If you are looking for a more temporary solution, you will likely file a bankruptcy to stop the foreclosure but then abandon the foreclosure process once you have found a solution for selling your home quickly to avoid the pending foreclosure.

What Happens If My House Isn’t Covered By Bankruptcy

Bankruptcy doesn’t protect your house from foreclosure permanently. In fact, when the only goal of bankruptcy is to stop foreclosure, you can lose protection quickly. Lenders can appeal and file a motion to dismiss, the bankruptcy judge also has discretion and may not allow your home to be covered by bankruptcy. If any of these scenarios happen, you will be scrambling to sell your house fast so that the house isn’t sold at the foreclosure auction because the lender will resume the foreclosure process right away. If you find yourself in this type of situation, make sure and find a reputable cash home buyer with experience buying houses in bankruptcy and foreclosure. A company like ours, Capstone Homebuyers, has dealt with this issue many times and can act quickly and appropriately, and has the resources to be able to help.

When Is It Too Late To Stop Foreclosure with Bankruptcy

Using bankruptcy as a last-minute option to stop foreclosure is possible up until the house is sold at the foreclosure auction. There has to be time for your bankruptcy attorney to file the case with the bankruptcy court and there will be documentation needed from you and forms that you will have to fill out along with attorney and filing fees. Some of the items you will want to be prepared for are the following:

Knowing that the foreclosure auction happens on the first Tuesday of every month in Bexar county, the absolute latest you could possibly hope to get a bankruptcy filing done and an automatic stay in place would be Monday, the day before the foreclosure auction is held. If your plan is to only use bankruptcy as a temporary delay tactic, make sure you start working with your preferred home buyer immediately. An experienced and qualified home buyer will work with your attorney to make sure everything is in place so that you can sell your home without delay.

Selling Your House During Bankruptcy

Selling your house during bankruptcy is always an option. Sometimes that is the plan from the very beginning and bankruptcy is used as a tool to buy you time. Occasionally, bankruptcy is the long-term strategy but it isn’t approved or your home isn’t covered or protected by the bankruptcy. And sometimes, you are years into your bankruptcy repayment plan and life happens and you need to sell your house that is covered by bankruptcy protection. If any of these scenarios happen, make sure you work with the right kind of home buyer. A home buyer with a great reputation as well as the experience necessary to properly help and guide you through the process. If you would like to know more about working with Capstone Homebuyers, we are always available to help…even if we don’t buy your house, we pride ourselves on helping members of our community.

Sell Before Foreclosure

Selling your house before a foreclosure without using bankruptcy is often a very good option. If you can’t pay a bankruptcy attorney, for example, you may just decide to sell instead of stalling the foreclosure for a short period of time. If you find yourself in a complicated foreclosure or bankruptcy situation, give Capstone Homebuyers a call. We will go over all of your options and make a recommendation free of charge. If it turns out selling your house is the best option, we will give you a fair offer that you can count on to help you out of your situation.

Foreclosure Vs Short Sale: What To Know Before It's Too Late

What Is A Home Foreclosure?

What is A Short Sale?

What is the Downside Of A Shortsale?

How Does A Short Sale Work?

Short Sale vs. Foreclosure and What's the Difference?

Options For Avoiding Both Short Sale and Foreclosure

Loan Modification

Bankruptcy

Deed in Lieu of Foreclosure

Sell Your House to an Investor

Selling Your House and Getting Cash From Capstone Homebuyers

Understanding The Beginning Of The Foreclosure Process In Texas

The Beginning Steps To A Foreclosure In Bexar County

What Is A Pre-Foreclosure In Texas?

What Is A Notice of Default?

Options Available To Homeowners At The Beginning Of The Foreclosure Process

You may be able to quickly sell your home to a reputable real estate investor in San Antonio TX like Capstone Homebuyers

You can contact the bank and ask them to permit a short sale

You may be able to declare bankruptcy

Request a loan modification

Be Aware Of Foreclosure Scams

Sell Your House To A Reputable San Antonio Based Company

Ways To Stop Foreclosure Last Minute

Use A Temporary Restraining Order To Stop A Foreclosure

File For Bankruptcy To Avoid Foreclosure

Sell Your House To A Reputable Cash Homebuyer To Avoid Foreclosure

How Capstone Homebuyers Can Help

Can Bankruptcy Be Used To Stop Foreclosure In Texas?

How Long Will Bankruptcy Delay Foreclosure

What Happens If My House Isn’t Covered By Bankruptcy

When Is It Too Late To Stop Foreclosure with Bankruptcy

Selling Your House During Bankruptcy

Sell Before Foreclosure

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