Understanding the Difference Between Foreclosure and Repossession
You may see the terms “foreclosure” and “repossessed” used interchangeably, but they shouldn’t be. The two words, while they are similar, are still two different words that mean two entirely different things. If you find yourself in a position where you aren’t able to continue paying on your mortgage, it’s important that you understand what these words mean and how they are different.
Foreclosure is the process that happens when a homeowner defaults on their mortgage. In this situation, there is a specific process that the lender has to follow. When a house is in foreclosure, the lender sells the house to a new buyer in order to recoup the money that the previous owner still owed on the loan.
Meanwhile, repossession is actually when the lender takes back possession of the house as part of the foreclosure process.
The foreclosure process
Foreclosure is not a fast process. The amount of time that it takes depends on your specific situation and largely on your area. The national average is 625 days. Many homeowners worry that if they are a few days or weeks late on their payment that they will lose their house, and that really isn’t the way that it works.
While the foreclosure process is taking place, the homeowner is able to continue living in the house. The actual repossession of the house does not take place until the foreclosure process is complete. At this time, the homeowner will be provided with a date that they will need to be out of the house.
What can you do about it?
It is possible to avoid foreclosure even if you are struggling to make your payments. Your first option would be to sell your house. If you need to sell fast and aren’t able to sell for what you owe on your house, you can approach your mortgage company about completing a short sale. This is when the lender approves for you to sell your house for less than what you owe on the house in order to avoid the foreclosure process. The lender than writes off the balance of the loan and you walk away from the house.
The most important thing for you to do if you cannot make your mortgage payment is to contact your lender from the start. Talk to them about what options exist, and if you can restructure your loan in a way to reduce the payments so you can afford the mortgage. The sooner you take action to talk to a lender for help, the more options you could have.
If you are unable to make your mortgage payment but your house is in escrow to sell, the lender is unable to begin the foreclosure process. Instead of waiting around for your lender to repossess your house after the foreclosure process, take action to see what you can do to stop it. Get involved in the process and do not let shame or fear stop you from pursuing all options along the way.
If you find yourself in a position where you need to sell your house fast, get in touch with us today. Our team specializes in helping distressed homeowners get out from underneath bad situations. In most situations we are able to offer you cash. We can help.