You’ve seen the ads saying “we buy houses NJ” and you’re probably tempted.
You don’t need to feel ashamed. Rough times fall on the best of us. Even the most financially-savvy property owners will find themselves down on their luck and on the verge of losing their New Jersey house.
If that happens and you start missing on your mortgage and insurance payments, what do you do?
Do you immediately search “how to sell my house NJ?” on Google and hope for the best?
When Does a Foreclosure Happen?
Contrary to popular belief, financial institutions don’t seize your property immediately after missing one payment. It usually takes at least 3-6 months of missed payments before the foreclosure process begins, and before that happens, financial institutions will usually offer a way to restructure the deal to make it easier for the borrower to pay for any payments he or she may have missed.
Should You Let Your Property Be Foreclosed?
No. For obvious reasons.
It’s your house. Where would you live if it was foreclosed? More importantly, you’ll essentially be throwing away all of the money you’ve invested on your property if you default your mortgage and let the bank have your property.
If you don’t have money though and the lending institution is not as flexible when it comes to helping you pay out your mortgage, what do you do?
A good answer to this is a short sale.
What is a Short Sale?
What happens in a short sale is the owner tries to sell the property before the foreclosure date. However, the reason why it’s called a “short sale” is that the market value of the property is not enough to cover the balance on the mortgage.
Not all lending institutions will allow for such a sale to happen. However, if you, the owner of the property, can convince your lender to let you short sell the property, it’s better for your credit score. But if you can’t convince the bank to do that, your property will be sold in a foreclosure auction, and if it doesn’t sell, it will be repossessed and placed on the market for sale like any other property.
Why You Should Never Foreclose
If possible, foreclosure should be avoided. The reason for this is that your credit score is impacted significantly if that happens. This will not only make it difficult for you to get another property in the future, but it will be harder for you to apply for other loans for your car or even get a job or rent a new house where landlords have strict credit score requirements.
Are There Other Options Outside of a Short Sale?
The best time to do a short sale before your lender starts filing legal action against you and your property, preferably right around the time you start missing payments or before you start missing them if possible.
Short sales aren’t the only answer though.
Selling to a cash buyer is another possible option.
Contacting a cash buyer as soon as you miss your first payment and before legal actions are taken against you is the best way to know just how much more money you can get from your property with little to no legal repercussions.