Judicial or non-judicial? Find out what your state requires before selling a home in foreclosure.
Being faced with the possibility of foreclosure on your home can be a difficult experience. It is important to be aware of all of the foreclosure home selling financing options to choose the best course of action. This includes understanding the type of foreclosure you face, what your selling options are and how the buyer’s financing affects you.
Judicial foreclosures are practiced in 45 states. In these situations, the lender files a complaint, and the court gives the homeowner the chance to contest the foreclosure, allowing the home to be sold to satisfy the debt. A trial will be held when there is a legitimate concern that the foreclosure is not correct. The owner must show documentation that the loan is up-to-date or the court awards judgment to the lender and authorizes a sheriff’s sale. Judicial foreclosures usually take longer than nonjudicial foreclosures – lasting from about six months to just over three years, depending on the state. A non-judicial foreclosure is carried out on a state-by-state basis and takes place outside the court system – this means the lender does not have to go to state court. The lender sends a notice of default to the homeowner, who must pay the debt, or the house is sold at public auction. Before considering this type of foreclosure, keep in mind that not all states allow a nonjudicial foreclosure process.
Between the foreclosure, home selling, financing options and general paperwork, it is easy for homeowners to be overwhelmed. One of the easiest ways to get through a foreclosure with your credit mostly intact is to sell your home before the bank takes back ownership. If you don’t think you can sell your house quickly enough, or for enough money to pay your debt, you may consider a short sale or a deed-in-lieu (DIL) of foreclosure. A short sale allows you to sell your house for less than what you owe, while a DIL lets you transfer ownership of the home back to the lender in exchange for clearing the debt. Both of these options are better than defaulting on your home. Additionally, a DIL may have some extra benefits like financial assistance for relocating costs and exit options that may allow you to stay in the home for a period of time.
If you decide to try foreclosure home selling, the financing options will be better for some prospective buyers than others. For example, you may be able to find a buyer who can take over your existing loan. The terms and conditions for this type of financing for selling homes in foreclosure differ depending on your state. You may need to get a release of liability before completing this type of sale. You may also have the option of providing owner financing for a buyer. However, this financing option for homes in foreclosure can be more complicated and create problems if your buyer makes payments late.
When you first find out about your foreclosure, home selling financing options may not be at the forefront of your mind. However, it’s important to take steps to remedy the situation quickly and protect your credit. Use RealtyNow to see the value of foreclosed homes in your area and find real estate agents who handle foreclosure sales.
To look at listings of foreclosed homes near you, enter a zip-code above.