Rent to Own vs Mortgage: Knowing the Differences
September 9, 2023
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If your home is about to go into foreclosure, you should be aware of a few things which might make it possible to prevent your home from being taken away from you. In fact, stopping a foreclosure isn’t just a matter of saving your house. It’s also about helping keep your financial future secure.
Here’s what many homeowners forget when the dreaded envelope is dropped into the mailbox: it is not merely a question of avoiding the pain and embarrassment of being forced out of your house by the local sheriff. It’s also a question of the legal and financial consequences which often manifest themselves months and years down the line.
The fact is that when a lender forecloses on your house, this foreclosure is marked on your credit report and stays there for seven years. This means that for seven years after the foreclosure, any time you try and borrow money — such as getting a credit card, buying a car, or taking out a loan to support your business — lenders will perceive you as a “high credit risk” and substantially increase the interest rates they offer you.
In many cases — generally for the two to three years following a foreclosure — you’ll find it’s entirely impossible to get a loan from any traditional lender.
At the same time it’s not just a matter of affecting your credit. When lenders start foreclosure proceedings to take ownership of your house, in almost every case they will at the same time file a lawsuit against you.
Why would they sue you in addition to foreclosure? The reason is that, should the amount of money they bring in from the auction not cover the mortgage balance plus their legal fess, they will be able to “keep you hooked” using the lawsuit until you’ve paid it all off.
As a result, you can’t say the process ends at foreclosure. You can still be in debt long after you’ve been evicted from the property. The court might order you to continue making payments long afterwards.
This is why many homeowners are extremely concerted about putting a stop to the foreclosure on their mortgage. Help here often pays off significantly in the future.
First, keep in mind lenders generally prefer to avoid foreclosure. It’s a time consuming, expensive process; generally they lose money. Therefore, if you can show them your missed payments were a one-time deal — something due to emergency circumstances like an injury — it may be possible to work out new mortgage terms which let you bring things current.
In order to pull this off, you will have to call the lender immediately, as soon as they notify you they are considering foreclosure. In fact it is better to call them before they notify you.
If it’s too late and they have already gone to the courts, you still have a chance to stop foreclosure. This is possible because the judge generally provides a six-month-long “Redemption Period” which allows you to stop the process by paying the lender. Even if you don’t have sufficient cash on hand to do this, you can often refinance your mortgage and bring in the money that way.
Even better, you can still refinance if your credit is poor enough that traditional lenders are not interested in helping you.
The way to do this is by refinancing your mortgage using the HOS Financial Refinance Buy Back Program. This program is designed to help people who have a steady source of income and at least 10% in home equity, but who are facing foreclosure or Power of Sale. It does not matter what your credit score is — HOS Financial will connect you with private lenders willing to take over the mortgage no matter your credit.
Provided you meet the criteria of at least 10% home equity and a regular source of income, HOS Financial’s lender will pay off your existing lender and stop foreclosure immediately. Then, you will continue living in your home, and a portion of your monthly rent will go towards a later down payment on a traditional mortgage.
At the same time, you will receive credit coaching by an experienced credit counsellor. This ensures that during the 2-3 years you are in the HOS Financial program, you will build up your credit back to good health. By the time you are ready to exit the program, you will be the kind of “credit risk” whom banks are happy to see.
To find out more, contact HOS Financial immediately. There isn’t a moment to lose. Foreclosures have hard deadlines, and any delay might unnecessarily cost you your home.