Leveraging a Home to Get You Through a Bankruptcy

Going through a bankruptcy is hardly easy for anyone. However, if you own a home, you have a few more options than most people. Here are some of the financial strategies that you can use if you own a home to see you through a bankruptcy.

Home Equity Line of Credit

If your credit history is good, you may ask a financial institution to give you a line of credit based on the equity that you have in your home. This line of credit pays back creditors and stay current on debts that would otherwise put you into bankruptcy. If you are already in the bankruptcy proceedings, a judge may offer a lifeline if your home assesses at a high enough value.

Debt Consolidation

Based on the equity in your home, you have options for debt consolidation. Consolidating a debt means finding an outside third-party creditor. This creditor will aggregate all of your debts into a single bill. It is possible to reduce the overall principle on the amount of money owed during a debt consolidation. The equity in your home buffers payments against this newly consolidated debt.

Home Rental

Renting out a home to renters gives you an additional stream of income that creditors may accept as a line of payment. The ongoing nature of rental income staves off bankruptcy while giving you a lifeline to find other sources of income to pay back your creditors. Check the market rates for rentals in your area to see how much your home is worth.

Regardless of your situation, income, or equity, if you would like to discuss all of your options for selling your home quickly to avoid foreclosure, contact us online.

Is Inheriting a House a Financial Drain?

So great-aunt Gertrude passed away, and you've received a letter form her attorney saying congratulations, you're inheriting a house. While this windfall might convince you that you were Aunty Gert's favorite, you'll probably rethink that after you've gone through the headaches and hassles of inheriting real estate. 

Maybe Gerty thought you were a dot.com zillionaire and wouldn't mind paying the estate taxes and the balance due on her reverse mortgage, but the reality is that most people don't consider the negative ramifications of a gift of real property and the burdens that they're placing on the giftee. As the heir, you are responsible for the finances associated with the property beyond the taxes and mortgage--the real estate taxes, homeowners insurance and association fees, and the general upkeep--utilities and maintenance. 

If you get lucky and find out the house is in a popular area and is in good repair, you should consider converting it to a rental property. You can manage the rental yourself if you've got the time and are handy with minor repairs, or you can hire a property management firm to oversee the entire operation for a percentage of the rent.

You could always move into the house and take over the mortgage payments, but that doesn't work if you've already got a house you love and a mortgage of your own. Disloyal as it may seem, selling the house is usually the practical path for a surprised heir, especially if you also inherit a house payment and an inheritance tax. 

If you need advice on how to manage the sale of inherited real estate, contact us and we can help you decide what's right for you. 

Things You Must do After Inheriting a House

Many people think that inheriting a home is something that is akin to winning the lottery-that is, until they learn what headaches are associated with it. If you’ve recently inherited property, here are some things you must add to your to-do list to ensure the process goes smoothly.

Review Property Records

The first thing you should do is determine whether or not a mortgage or reverse mortgage exists on the home. Even if the home had been paid for for quite some time, your loved one may have needed some additional cash and taken out a reverse mortgage or home equity line of credit. That person may have been embarrassed to tell anyone about financial struggles he or she was having, and elected to keep it a secret.

Surprise mortgages aren’t all you need to worry about. You should also check the courthouse for liens against the property. It’s also a good idea to ensure the property taxes are up to date. Many relatives are caught off guard to find the property they have inherited does not have a free and clear title. If this is the case, it’s better to discover this before the estate is settled.

Inspection

Older adults often put off home repairs because they can no longer do them themselves, and feel uncomfortable asking others to fix things for them. As such, you may be surprised to discover that there are a lot of little things wrong with the home that must be addressed before someone could live in it.

Another thing seniors tend to avoid is making upgrades. If your relative lived in the home for some time, chances are the plumbing, wiring, and HVAC system may be inadequate. Having an inspection performed will let you know if these systems need updating.

Inheriting a house may seem like a dream come true; however, it can easily turn into a nightmare if there are underlying issues that must be taken care of first. In many cases, selling the property quickly could be in your best interest, in which case we invite you to contact us today to find out more.

How to Avoid Foreclosure

Unfortunately, each year millions of homeowners lose their homes to foreclosure because they fail to make their mortgage payments. The good news is that this does not have to occur if you take the needed steps entailed in preventing foreclosure. If you’re worried about having to forfeit your home to foreclosure, here are some ways to avoid this problem.

Consult with Your Lender

Don’t ignore the situation. Contact your lender immediately after realizing you’re may be at risk for foreclosure because you’ve missed a payment. Most lenders don’t want to go through the process of foreclosure as it can cost them considerable time and money.

Stress to your lender that the problem is not permanent, but only temporary. For example, maybe you can’t pay your bills because of unforeseen medical expenses or you’ve lost your job. Most likely, your lender will grant you a reprieve until you get back on your feet. Sometimes, lenders ask for a lump sum payment. If you’re really fortunate, your lender may actually freeze monthly payments. 

File for Bankruptcy

After filing for bankruptcy, what’s known as an “automatic stay” goes into effect straight away. This stops a lender from foreclosing on a home or trying to collect debts. In other words, the foreclosure is halted during the bankruptcy process.

Filing for a Chapter 13 bankruptcy can help in keeping your home as it restructures your debts. This type of bankruptcy allows you to make partial or full repayments of your debts. Therefore, foreclosure may be avoided and you get to stay in your home. This is because you can make your delinquent mortgage payments using a Chapter 13 bankruptcy.

Filing for a Chapter 7 bankruptcy isn’t recommended once you’ve already entered the foreclosure process. But it can delay the proceedings, giving you additional time to live in your home without having to make payments.

Hire a Housing Counselor

You may want to hire a housing counselor who can help you straighten out your finances. What’s more, a good housing counselor can help you devise a workable compromise with your lender to prevent foreclosure.

Just be cautious of any counselor promising to either pause or stop the process of foreclosure. On the other hand, consider that some housing counselors can be expensive. To be safe, find your housing counselor from the website of the Department of Housing and Urban Development.

Considerations and Warnings

• ·       Locate your loan documents to know what will occur from failing to make mortgage payments. Be sure to thoroughly read and understand all terms of the document. If you need help, get counsel from a reliable realtor or attorney.
• ·       Be familiar with your state’s foreclosure laws, as well as the time frames involved.
• ·       Don’t be a victim of foreclosure scams. You should never feel forced into signing documents that says a firm will act in your behalf. If you do, you may be signing over your property title. As a result, you could become a renter in your own house.                                                          

You may need to sell your home. That’s when you need to call the professionals at We Buy Your Austin Home. We will buy your home, at cash, regardless of its condition, situation or equity. Please contact us.