Falling behind on your mortgage can feel like watching your house slip away piece by piece until there is nothing left. Nobody wants to be in that position. Unfortunately, life does not always go according to plan.
If you are an Arizona homeowner struggling financially, here is one thing you must keep in mind. You have time and options to protect your future. At Doug Hopkins, we are ready to help those with delinquent mortgages.
Understanding Delinquency on Mortgages
A mortgage becomes delinquent when you fall behind on the payments you agreed to make when you took out your home loan. If those missed payments continue, your lender can start the foreclosure process to recover the money they loaned you.
Foreclosure generally follows six stages:
- Payment Default: Most lenders offer a grace period after your payment due date. If you do not pay on time or if you violate other terms, your loan goes into default.
- Notice of Default: Once you have gone 30 days without paying, your lender may file a Notice of Default. By the time you have missed three monthly payments, your lender may send a demand letter showing exactly how much you owe.
- Notice of Trustee’s Sale: Your lender may move to schedule a foreclosure sale after four missed payments. You will receive a Notice of Trustee’s Sale, which provides the scheduled date, time, and location of the sale.
- Trustee’s Sale: Once the trustee’s sale happens, the foreclosure becomes official. The property is sold through a public auction following the procedures required under state law.
- Real Estate Owned (REO): After the auction, the property goes to the highest bidder. If the lender ends up purchasing it, it becomes Real Estate Owned (REO).
- Eviction: After completing foreclosure, the people living in the house will be required to move out.
Losing your property is already tough. What makes foreclosure even more troubling is that it also impacts your credit by appearing on your credit report within a month or two after the finalization. It remains there for up to seven years from your first missed mortgage payment, too.
Foreclosure Timelines in Arizona
Federal law generally requires mortgage servicers to wait until a borrower is more than 120 days behind before beginning the foreclosure process. That waiting period gives homeowners time to contact their lender, apply for assistance, or explore solutions. In Arizona, there are two possible timelines.
Judicial Foreclosures
In a judicial foreclosure, the lender files a lawsuit asking the court for permission to foreclose on the property. If you do not respond to the lawsuit, the court will rule in the lender’s favor automatically. If you do challenge the foreclosure, both parties will have the opportunity to present their case.
Nonjudicial Foreclosures
A nonjudicial foreclosure usually takes seven to eight months from the first missed payment through the sale. It officially starts when the trustee records a Notice of Trustee’s Sale with the county. Within five business days, the trustee sends the notice to the homeowner by certified mail. The notice is also published in a local newspaper for four consecutive weeks, posted on the property when possible, and displayed at the courthouse.
On the scheduled date, the property is sold through a public auction. The lender often bids using the amount still owed on the mortgage, but outside buyers can also bid. If another buyer purchases the house for more than what is owed on the mortgage and any other liens, the remaining money belongs to the homeowner.
Arizona law requires that the foreclosure sale cannot take place sooner than 91 days after the notice is recorded.
Get Help Avoiding Foreclosure in Phoenix, AZ
The Various Paths You Can Take
Lenders do not really wish to foreclose properties. After all, the process demands time and money. As such, your lenders will be willing to work with you if you reach out early and honestly explain your financial situation. Here are some of the most common ways to resolve mortgage delinquency.
Forbearance
Your lender may allow you to reduce or temporarily pause your payments for a certain period. Once the forbearance ends, you repay the missed amount through a lump sum, higher monthly payments, or add the balance to the end of your loan.
Refinancing
Refinancing replaces your current mortgage with a new loan that may have a lower interest rate, lower monthly payment, or a longer repayment term.
Mortgage Modification
Your lender may adjust your loan by extending the repayment period, lowering your interest rate, or changing other loan terms to make your monthly payments more affordable.
Take note that while this alternative can reduce your monthly payment, it may also increase the total amount of interest you pay over time.
Selling the Home
If your house is worth more than what you owe on your mortgage, selling it could allow you to pay off your loan and walk away with some of your equity.
Renting Out the Home
Rental income may help cover your payments while you improve your financial situation. Check with both your lender and your homeowners association to ensure you do not break any rules.
Deed in Lieu of Foreclosure
A deed in lieu of foreclosure means voluntarily transferring ownership of the property to your lender instead of going through the foreclosure process. In return, the lender typically releases you from your remaining mortgage obligation.
Equity, Underwater Mortgages, and Short Sales Explained
Many homeowners decide that selling is the best solution. Before you do, you must understand two terms: home equity and underwater mortgages.
Home equity is basically the difference between what your property is worth and what you still owe on your mortgage. It can pay off your loan! However, if you have an underwater mortgage, which is when your mortgage balance is higher than your property’s current market value, you would still owe money to your lender after selling.
What can you do, then? Go for a short sale. Your lender will agree to let you sell your home for less than the balance and accept the proceeds as payment. Your credit will still be affected, though.
To really avoid foreclosure, sell directly to a cash buyer like Doug Hopkins.
Why Sell to a Cash Buyer?
Cash buyers like Doug Hopkins purchase houses for cash. This way, homeowners skip the hassles of the traditional real estate system and enjoy the following benefits:
- As-Is Sales: We do not care how filthy your house is or how many repairs it needs. Our team will purchase it, incomplete upgrades and all!
- High Off-Market Prices: Expect fair, competitive, and no-obligation cash offers, as well as clear explanations.
- Zero Charges: We are not agents, so forget about commissions and other fees. Our services are free!
- Flexible Timeline: If you need to close within a week or have a little more time to stop foreclosure, our team will accommodate.
Doug Hopkins is one of the nation’s most recognized and trusted real estate professionals. He has bought and sold more than 20,000 homes throughout his career, supporting thousands of individuals and families in Arizona. You could be one of them if you want to sell my house fast for cash!
Sell Your Arizona Home for Cash
Whatever led to your mortgage delinquency, you do not have to wait until foreclosure leaves you with fewer choices. At Doug Hopkins, our Cash for Houses program in Arizona will help you move forward fast. Call (602) 567-1505 or request an instant cash offer online.
