We all have rough times now and then. As a property owner, having a rough time may mean losing the biggest investment of your life: your San Antonio house. If you are unable to make your mortgage, taxes, and insurance payments, you are facing foreclosure with your lender after missing a certain number of payments. The timeframe for this depends on the state you live in and your promissory note and deed of trust.
Foreclosures Happen to the Best of Us
In most cases, the foreclosure process does not begin until you have missed between three to six payments. It’s important to understand that foreclosure is a process, and the timeframe of when this happens all depends on the state you live in and your promissory note and deed of trust. The first step is called pre-foreclosure, which means the property is in default and the bank may or may not foreclose on the property.
The second step can be a short sale. This is when the owner tries to sell the property before the bank forecloses, but the market value is slightly less than the balance due on the loan. Depending on the bank, they may or may not accept offers less than the balance due at this point. If the owner can get the bank to accept a short sale, it is much better for their credit than a foreclosure.
The third step is the foreclosure auction. This is when the bank tries to get the most money for the property in a short amount of time. The property will be auctioned off, and the highest bidder will become the new owner. After this step, it is very difficult for the previous owners to ever regain the property.
The fourth step is an REO, which stands for “Real Estate Owned” If the property does not sell at auction, the bank repossesses the property and places it on the market for sale. Most banks then hire a real estate agent to sell the property for them.
Based on the process outlined above, foreclosure is the bank taking title or “possession” of your San Antonio house. This would impact your credit score anytime you need a loan in the future and would also show up in any reports that future landlords run. The foreclosure stays on your credit for at least seven years before falling off, sometimes ten years.
Depending on your situation, you may have more time to live in your home if you let it go to foreclosure because of the statutory redemption period. This timeframe depends on whether you took title via mortgage or deed of trust. If you have a mortgage, the process may take as quickly as 30 days, or as long as two years. At the end of the redemption period, if you have not reinstated your loan and are still unable to make your payments, you really have to move out. If you took title through a deed of trust, there is typically no statutory redemption period, and you have to move out immediately.
What Does a Foreclosure Look Like on Your Credit Report?
One of the most painful consequences of foreclosure is the damage it causes to your credit score. Generally, the foreclosure will appear on your credit report within three months of the lender initiating the foreclosure process. As soon as the negative impact is reported on your credit report, you will notice an immediate lowering of your credit score, making it more difficult for you to obtain new credit.
In addition to lowering your credit score, the lender will also report any missed or delinquent payments that led up to the foreclosure. The reporting of these missed payments, combined with the reporting of the foreclosure, can be catastrophic to your credit score. Because missed payments lower credit scores more than any other derogatory entry, people who are foreclosed upon likely have already seen their score drop substantially before the proceedings even begin.
The negative impact of a foreclosure does not disappear overnight and can take years to recover from. The negative mark by a lender that you have been the subject of a foreclosure will stay on your credit report for a period of seven years. This will cause a lasting significant negative impact that is extremely difficult to recover from.
Do You Still Owe Money After a Foreclosure and How Long Does Foreclosure Take?
Under Texas law, lenders can foreclose on a house without having to go to court. When you default on your mortgage, your lender can use the “power of sale” granted to them by the mortgage to sell the property at auction. This means you never have a chance to argue your case before a judge or a jury. You aren’t given the chance to try and cure any default, and you can become homeless with your house being sold to the highest bidder at an auction. To make matters worse, even after the auction of your house, you can still owe money on the house if the sale price at auction is insufficient to cover what you owe on your loan.
Additionally, Texas law permits lenders to sue borrowers for what is known as a “deficiency judgment” within two years from the date of the sale—the date your home was foreclosed on. This means you can lose your home, and the bank can still go after you for more money, and the consequences can continue for years to come.
The types of foreclosures that can occur depend on the state you live in and your mortgage terms. Some foreclosures involve legal action (judicial foreclosures), and others do not (non-judicial foreclosures). The types of foreclosures include:
Judicial Foreclosure: With a judicial foreclosure, the lender files a lawsuit and the borrower is notified of the non-payment. The homeowner has 30 days to make up the missed payments, otherwise, the foreclosure process will proceed. Judicial foreclosure is a standard procedure nationwide, but certain states (listed below) only allow this approach and don’t permit other types of foreclosures.
Power of Sale: A power of sale foreclosure is allowed in some states if your mortgage has a power of sale clause in the contract. Once you fall behind on your payments, your mortgage provider is allowed to put the house up for auction. A power of sale foreclosure is considered a non-judicial foreclosure because no legal action is taken.
Strict Foreclosure: Strict foreclosures are less common because only a few states allow them. In this case, the mortgage lender files a lawsuit against the homeowner, and if the homeowner does not make up their payments within the court-ordered period, the lender can seize the home.
4 Ways a Foreclosure Will Impact You in San Antonio
By having a better understanding of what lies ahead, you will be better equipped to take immediate action against the negative consequences of foreclosure from the start. Your future self will thank you for taking the time to learn more about your options during the process. We’ll cover four ways that a foreclosure will impact you in San Antonio.
Denied Credit:
Having a foreclosure in San Antonio appear on your credit reports will cause you to be considered very high risk. Once this appears in your credit history, it will impact your overall purchasing power. Bad credit often leads to credit applications being denied for credit cards, loans, or mortgages.
Any financial institution that is willing to approve consumers with bad credit usually charges exorbitant interest and annual fees that those with good credit avoid. Additionally, it could be a reason you are passed over for employment opportunities.
Financial Loss:
Among the top reasons for homeownership is that your equity builds up over time as your debt decreases, and San Antonio property values rise. Your financial gains could be in the hundreds of thousands. Equity is the difference between what your property would bring in the current market and the amount still owed on the mortgage. Losing all the equity you have in a property can be a substantial financial loss if you cannot stop the foreclosure.
Debt:
By taking quick steps to resolve a pending foreclosure, you can decide how your home is sold and for how much. Open your mail before it’s too late! Keep the lines of communication open so that you can be on top of what actions your lender may be ready to take and how much time you have to change the outcome in your favor.
After a foreclosure, you’ll have no such control. Should your San Antonio property sell for less than is still due on your mortgage, you will still be required to make payments on this debt. This is known as a deficiency debt and can have an enormous impact on your lifestyle and family. Not to mention eating into your budget. Additional liability on your credit report will only increase the higher costs associated with having bad credit.
Housing in the Future:
Foreclosure impacts your housing options in many ways. In general, landlords run credit checks as the first step when interviewing tenants. Naturally, your financial history will make you a higher risk and may cause you to be passed over for more desirable properties. Many landlords will simply not rent to individuals with foreclosures or evictions.
Additionally, your choices in financing will be highly restricted should you wish to purchase another home. Fannie Mae is among the largest in the nation and offers a program with several financial benefits. Should you have gone through foreclosure and seek a mortgage lender, you should be aware that Fannie Mae will require a waiting period of seven years before you will be eligible under their guidelines.
Local San Antonio House Buyers Have Lots of Options for Houses But Fewer Options for Financing
There are floods of homes on the market, and when there are increasing numbers of foreclosures such as those caused by the recent economic turmoil (and where it continues in many areas), some types of houses just aren’t selling as fast as they were 5 years ago… while the “sweet spot” type of house (3 bedroom 2 bath in the middle to lower-middle price range) that do not need any repairs are selling at a good clip.
Part of it is because lending guidelines have changed since the housing collapse so fewer buyers are out there for some homes…Lending has become even tighter since the pandemic which means that many more people are unable to get a loan.
Partner that with the fact that there are still stockpiles of foreclosed houses in San Antonio that keep trickling into the market from banks…and it appears that there will be an increase in foreclosures in the next few months. Now, buyers are more choosy than they were in years past because many of them have learned that you can no longer buy a house and bank on the fact that it will appreciate a 3%+ a year in value.
If you are a seller in this market, you may be becoming discouraged and wonder how you can just sell your San Antonio house fast, right?
If it seems like you keep putting more money out to improve your home (or if you have repairs but don’t have the money to do those repairs), but are still having a hard time selling your San Antonio house, you aren’t alone. A buyer’s market makes conditions hard for seller’s to swallow. No one likes to see their home picked apart, criticized, or devalued, but that is exactly what most sellers are dealing with.
Worse yet, due to the devastating consequences of foreclosure in San Antonio, many sellers in the area who hold out for the price they want are getting little action and no offers at all… sometimes leaving the house on the market for months on end. Or worse, they themselves are on the brink of foreclosure and they do not get their house sold in time and end up losing it with nothing to show.
How Foreclosures Have Driven Local Housing Prices Down
When the housing market crashed and the foreclosures began to roll in, it flooded the real estate market in San Antonio. That means that there is more inventory on the market. When that happens, that drives the price of everyone’s house down because there are more options (at lower prices) for buyers out there.
When there is more inventory than buyers, it devalues the homes for sale.
The jury is still out on whether we’ve climbed out of this foreclosure hole or not. There are still lots of foreclosure houses in the San Antonio area and the banks are still holding many many area homes in their own inventory that aren’t even for sale yet.
There is no crystal ball to predict how many more foreclosures will be hitting the market due to the global pandemic, but with all the financial hardships that people are facing including the devastating effects of foreclosure, it makes sense to think there will definitely be an increase.
But, there are some things you can do in this market to reach your goals with selling your house. Some of these things are better when you have plenty of time and some are a better choice if you need to sell more quickly.
Selling Your House in a High Foreclosure Market
If you want or need to sell your house, you have a couple of options:
1. If you don’t need to sell your house fast and can wait out the market, consider getting a great real estate agent on your side. If you can afford to pay real estate agent commissions and have the flexibility to wait, it might be best to give it some time for the perfect buyer to come your way and pay the price you’re looking for. The market will improve at some point, and if you can sell your house next year rather than now, it may mean a few extra bucks in your pocket due to a higher sales price.
A great real estate agent can help you list and market your house effectively. If you don’t have a good local agent, just reach out to us. We can connect you with some great real estate agents in town who have shown they can sell a house fast. Email us here for a San Antonio area real estate agent referral.
2. If you do need to sell your house fast, consider quick sale options like selling your house to us. Selling your house quickly in a market like this can be difficult if you go the traditional real estate agent route, unless you significantly discount your house. On top of that discount, you’ll also be paying real estate agent commissions, which takes even more cash out of your pocket in the end.
Another option to consider is selling your house to a real estate investment firm like Sell My San Antonio House. We buy houses in San Antonio and can make you a cash offer within 24 hours for a fair price. We’re not looking to list your house; we’re actually looking to buy it from you. We’ll take care of any repair costs after we purchase it, then we either keep it as a rental property or invest our time, money, and expertise into selling it to another homeowner. It can be a win-win-win situation.
If you’re looking for the full retail value of your house, we can’t pay that. We do need a discount so we can make any necessary repairs, cover all the closing costs, and leave a little room for profit on our end. However, you won’t ever pay us any fees or commissions.
Which is Better? A Foreclosure or Short Sale of Your San Antonio House?
During the foreclosure process, you may have the opportunity to list your house as a short sale. The best time for a short sale is when you realize you can’t make your payments and before the lender files legal action. You can list your house on the market and try to get an offer that satisfies or gets close to your loan balance.
Selling your house in a short sale can relieve some of the credit damage of a foreclosure, though it still negatively affects your credit. The process can be difficult as you must constantly communicate with the lender and wait for them to approve or counter offers.
Reach Out To Us To Sell Your San Antonio TX House Fast… Even In A Market Like Today’s
If you have questions about your specific circumstances and how to avoid the ramifications of foreclosure, feel free to reach out to Sell My San Antonio House at (210) 201-6644. Your future self will thank you for taking the time to learn more about your options and taking immediate action against the negative consequences of foreclosure.
If you have any questions about our local San Antonio house buying service just reach out to us anytime or read our other articles to learn more, or for a more detailed description of how the process works you can visit our How It Works page.