Losing your Houston home isn’t the only consequence of going through a foreclosure. There are tax and credit consequences that can haunt you for a very long time.
For example, the IRS considers a foreclosure to be “debt forgiveness.” Do you still owe $168,992 on the house the bank took? The IRS may well see all of that money as “income” and tax you accordingly, creating another bill that you can’t necessarily pay.
Foreclosures also remain on your credit report for more than seven years, and they can lower your score by as many as 150 points. In addition to lowering your credit score, this fact can make it difficult to secure housing in the future, even rental housing. Getting a new home loan isn’t impossible after foreclosure, but you might have to wait a long time.
And, of course, if you wait too long to leave the home you might even have to deal with the indignity of watching the local Sheriff cart all of your belongings out onto the front lawn in front of all of your neighbors.
You need to come to grips with the idea that you’re going to lose the house. Now, all that remains is to determine how you lose the house.
For most homeowners, an as-is sale is the only way to mitigate some of the financial and personal consequences of foreclosure. This is true even for those homeowners who are underwater on their mortgages.
Short sales may leave you with a deficiency balance, but you can work out a way to pay that balance down over time. The deficiency balance also will not be attached to your new residence, wherever that might be: nobody can throw you out of your new place for failing to pay it.
And if you’ve got a lot of equity, then selling as-is might just pay off your loan and leave you with a nice big check to help you start your new life.
There’s just one catch. Few potential homeowners are willing to buy a home “as-is.” Someone who intends to live in a home doesn’t want to inherit a whole bunch of new problems. They want to sit back and enjoy their dream home right away. And if you’re facing foreclosure, you probably don’t have the ready cash that would allow you to replace the AC or fix the roof.
Home investors are a great choice if you find yourself in this situation. First, home investors buy as-is houses all the time. We’re not going to quibble with you over the state of the roof. We don’t expect you to fix it.
Second, reputable home investors aren’t just reputable with consumers. They’re reputable with banks, too. Often, we are able to become your allies, negotiating with the bank to see the short sale through. We can also do this because we are typically offering cash for the sale. Short sales where lenders are relying on another buyer who is, in turn, going to use a lender tend to fall through. By contrast, bankers are happy to take the fast cash in most cases.
Furthermore, we can even do these things when the foreclosure process is rather late in the game. We may become the eleventh-hour heroes who keep a foreclosure off your credit report, even if the auction is already scheduled. We can’t guarantee this, of course, but we’ve made it happen in the past.
If your home investor is honest he or she would tell you to look into every option first, including refinancing, loan modification, payment plans or other deals.
Home investors are the ones fixing your roof or replacing the AC. Most lived-in homes need work before they’re ready to sell or rent. Take that into account. They’ll absorb those costs, and still need to make a profit in order to remain in business.
We can come to your rescue. Depending on the severity of your situation, you might not be able to escape with anything more than a clean credit report and your dignity.
Research the investor’s reputation, then interview the investor relentlessly. Get answers to every question on your mind before accepting the offer. Good home investors will happily answer.
You’re in a hard enough situation without lying awake at night, asking yourself whether you could have done better. Ideally, the interaction between you and a home investor should be a positive thing. It should come as a relief.
Are you struggling to pay your mortgage? Is the threat of foreclosure hanging over your head? Call Houston Estate Services and ask all of your questions. We’re happy to answer, even if you don’t ultimately sell the home to us.
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