Avoiding Foreclosure by Selling your Home First

By: Seb Frey

Foreclosure is not something that anyone plans. It often happens as the result of unexpected circumstances, such as a job loss or prolonged illness. Or there may be a variety of factors involved. The end result is that you are faced with losing your home and all that you have invested in it . . . but there is a solution.

Selling your home before the bank forecloses can be a way to avoid foreclosure and to recover some of your losses. Though obviously not the option you would choose if you had another, it may be your only chance to move on without major damage to your credit history. Having a foreclosure on your record means that you will most likely have problems qualifying for credit in the future, so selling your home before that happens can be a way to salvage your credit.

You use credit for just about everything these days, from buying a house to leasing a car and qualifying for cable TV! With a foreclosure on your record, you could face serious problems in the future.

Giving up your house is the best option if you find that you simply cannot keep up with mortgage payments. You can then pay off the mortgage and save face with the bank. Until your lender (usually a bank) files a Notice of Default, you may still have other options, but once that notice is filed, the next step is foreclosure, so you need to take action fast.

The lender probably doesn't want to foreclose, they are more interested in getting their money back and a home sold by a bank often doesn't recuperate the amount of the loan. It is in their best interest to give you a warning and let you try to solve the problem. Since you will essentially lose everything if you let the bank take your house back, it is also in your best interests to find a solution, not just to save your credit but also your standard of living. Starting over again after a foreclosure is not easy.

Time is of the essence when you are attempting to sell your home before the bank takes it. You will most likely have to price it fairly low because of this, but look for a real estate agent who is confident that they can sell your home fast. Otherwise, you may need to talk to a discount broker who can get the job done quickly, though you won't make a lot of money. At this point, you may be focusing mainly on paying off the bank and getting a fresh start in your life, without losing all your equity and ending up with a lousy credit report.

If you know that foreclosure is in your near future, you need to start thinking about how to get out of it and save your credit so future home purchases won't be in jeopardy. Selling your home first, before the bank forecloses, could be the best solution.

Foreclosures
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