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How You Can Avoid Foreclosure

Although there’s very little chance of a large-scale foreclosure crisis, foreclosure is still a possibility for some homeowners. And while the overall percentage of homeowners at risk is generally low, that’s little relief to those individuals who are facing challenges today.

 

Foreclosure is the legal process by which a lender attempts to recover the amount owed on a defaulted loan by taking ownership of and selling the mortgaged property. Typically, default is triggered when a borrower misses a specific number of monthly payments.

 

Keep in mind though that there are multiple alternatives available to help you avoid having to go through the foreclosure process, including reinstatement, loan modification, deed-in-lieu of foreclosure and short sale.

 

But before you explore those options, it’s worth seeing if you have enough equity in your home to sell it and protect your investment. This means understanding the difference between what you owe on the home and its market value based on factors like price appreciation. Many homeowners are surprised to find that they have far more equity in their homes than they realize.

 

Over the last year, buyer demand has been high while housing supply remained low. That’s led to a significant increase in home values. By default, the amount of equity you have in your house also increases.

 

Over the past year, chances are your home’s value and equity has risen dramatically. If you’ve been in your home for a while, the mortgage payments you’ve made over time chipped away at the balance of your loan. If your home’s current value is higher than what you still owe on your loan, you may be able to use that increase to your advantage.

 

Homeowner equity has more than doubled over the past decade and become a crucial buffer for many weathering the challenges of the pandemic. These gains have become an important financial tool and boosted consumer confidence in the U.S. housing market.

 

To find out what your house is worth in today’s market, partner with one of our local real estate professionals. They will be able to give you an estimate of what your house could sell for based on recent sales of similar homes in your area.