Foreclosure is a serious issue, and it can have a negative impact on your life. However, if you take the time to learn about foreclosure, you can take steps to protect yourself.
This blog post will discuss some of the basics of foreclosure in Colorado. We will also provide information on how to get help if you’re experiencing financial difficulty.
What is Foreclosure?
Foreclosure occurs when a lender tries to recover an outstanding loan amount from a defaulting borrower. In Colorado, foreclosure can be either judicial or nonjudicial. A judicial foreclosure occurs through the court system, whereas a nonjudicial foreclosure does not.
If you’re struggling to pay your mortgage payments, you can do a couple of things to avoid foreclosure.
Talk to Your Lender
If you are having trouble paying your loan, you can contact your lender to see if they’re willing to work out a payment plan. Paying lower amounts over a more extended period of time may be the best option in this situation.
Refinance the Loan
Another option is to refinance your loan. Refinancing with a new lender may allow you to get a lower interest rate or better loan terms to help make your payments more manageable.
Request a Mortgage Modification
If you can’t keep up with your current mortgage payments, you may be eligible to request a mortgage modification. This process can change the terms of your loan, like the interest rate or loan length.
Sell Your Home
Lastly, you may want to consider selling your home if you’re having trouble paying your mortgage. Though it can be a tough decision to make, it can be your best shot to avoid foreclosure.
Stopping or Delaying Foreclosure
If the foreclosure process has already begun, you can do a few things to stop or delay it.
Appeal the Foreclosure Decision
If you’re in the judicial foreclosure process, your first option is to appeal the foreclosure decision. This can delay the foreclosure process and give you time to catch up on your payments in the meantime.
Request a Mediation
You can also request mediation if you’re in the judicial foreclosure process. This involves meeting with your lender to work out a repayment plan.
Sell Your Home
If you’re in the nonjudicial foreclosure process, you opt for selling your home. This can allow you to pay off your mortgage and prevent foreclosure from showing up on your credit report. You can choose one of three ways to sell your home.
If you can’t sell your home for the total amount of your mortgage, you may be able to make a short sale. In this process, your lender agrees to accept less than the full amount owed.
Deed in Lieu of Foreclosure
If you can’t sell your home and don’t want to go through the short sale process, you may be able to deed your house back to the bank in lieu of foreclosure. This alternative allows you to avoid going through foreclosure and has a less negative impact on your credit score.
Sell for Cash
The final option involves selling your home for cash. Selling your house to a home buyer company is a quick and easy way to avoid foreclosure by paying off your mortgage with the money you get for the sale.
What to Do if You Can’t Avoid Foreclosure
If foreclosure is non-negotiable, you can still minimize the damage. Remaining in your house until the process is complete can give you time to look for another home and help you preserve your belongings.
You can also try negotiating a settlement with your lender if you have an outstanding loan balance. If you work out a way to pay off your debt, you can avoid having a deficiency on your credit report caused by foreclosure.
Finally, you should always consult an attorney before undergoing foreclosure. An attorney can help you understand your rights and options while also ensuring that you receive the most satisfactory outcome based on your circumstances.
The Process of Foreclosure in Colorado
If you’re facing foreclosure, it’s key to understand the process. In Colorado, the foreclosure process can take anywhere from 110-125 days.
The first step in foreclosure is when your lender files a Notice of Election and Demand. This document starts the foreclosure process and gives you 20 days to respond. If you don’t reply, your home will be sold at a public foreclosure auction.
If you do respond within 20 days, you’ll need to attend a mandatory mediation with your lender. At this meeting, you’ll try to find a solution, such as a loan modification. Your home will be scheduled for a public foreclosure auction if you can’t agree.
Once your home is scheduled for a public foreclosure auction, you’ll receive a notice of the sale date. The sale date will be at least 21 days after the notice is served. If your home is sold at the auction, you’ll have to move out within ten days.
The Consequences of Foreclosure
Foreclosure can have serious consequences for most homeowners. Here are some of the short- and long-term consequences that may result from a foreclosure.
- Loss of home: A foreclosure’s most common consequence is home loss.
- Damaged credit: A foreclosure can hurt your credit score, making it challenging to get a loan in the future.
- Emotional stress: A foreclosure can be an emotionally draining experience, resulting in anxiety, depression, and even suicidal thoughts.
- Difficulty finding new housing: A foreclosure on record can make it challenging to find a new house since landlords tend to hesitate to rent to someone with damaged credit.
- Difficulty finding a job: Many employers check applicants’ credit scores, and foreclosure can make finding a job difficult.
- Difficulty obtaining a loan: Having your credit score damaged by foreclosure will make it more difficult for you to get a loan in the future.
- Increased risk of homelessness: Losing your home can result in homelessness as you may find it difficult to find new housing.
Resources for Homeowners Facing Foreclosure in Colorado
If you’re facing foreclosure in Colorado, several resources are available to help you. These include:
- Colorado Legal Services: This organization provides free legal assistance to low-income residents of Colorado. They can help you understand your rights and options under the law and may be able to represent you in court.
- The Colorado Housing and Finance Authority: This authority provides a variety of programs to help homeowners facing foreclosure, including mortgage assistance, counseling, and education.
- Colorado Housing Connects: This organization assists Colorado residents who are at risk of losing their housing due to COVID-19.
Avoid Foreclosure by Selling Your Home for Cash Today
If you’re in danger of losing your home to foreclosure, selling your house for cash may be the solution you need. At Favor Home Solutions, we understand how difficult this decision can be, and we’re ready to assist you through the process so you sell your home quickly and move on to your new life.
Our team can help with:
- Evaluating your situation and making a fair, all-cash offer
- Closing on the date of your choice
- Taking care of all the paperwork
- Paying all the closing costs
- And more!
If you’re interested in learning more about getting a free, no-obligation cash offer for your home, contact us today!