Going through a foreclosure can be stressful. If you have equity in your home, it’s understandable that you might wonder what could happen to it and what you can do to make sure you get the most equity out of your home.
Equity always remains the property of the homeowner. However, foreclosure can impact your equity and how much you get in a variety of ways. There are steps you can take to defend your equity throughout the foreclosure process, whether or not you get to stay in your home.
An experienced foreclosure attorney can help you through the foreclosure process while helping you protect your equity. Contact Joshua Denbeaux today to learn more about how we may be able to help you.
What is Home Equity?
Home equity is the amount of your home that you owe outright. To calculate your home equity, you take the fair market value of your home and subtract the amount you owe on your mortgage. The amount left is your home equity.
How Does Equity Work in Foreclosure?
When a home is sold in foreclosure, the money from the sale is used to pay off your outstanding mortgage balance. Any money that’s left after paying off your mortgage is equity that’s returned to the homeowner.
However, the foreclosure process can eat into your home equity process. Foreclosure can take from your equity in a variety of ways. While it seems straightforward, there can be other ways the lender can reduce the amount of equity you get to keep.
Equity after selling a foreclosed home will be used to pay off late fees, penalties, and missed payments. Late fees could be 4-5% of your outstanding balance or more.
If you owe a lot on your mortgage, you could have to pay a lot in late fees. To receive as much equity as possible, it may be a good idea to try to pay off as much of your outstanding mortgage balance as possible to reduce the total fees that may be higher than the payment you could make.
It’s not uncommon for homeowners to have to pay costs associated with the foreclosure process. You might have to pay for attorney fees and title costs. These fees will come out of your home equity.
If your homeowner’s insurance has lapsed, your lender may have to get “force-placed” insurance while they’re in possession of the home. This is another fee that you would be required to pay from your home equity.
Lenders often want to get rid of foreclosed homes quickly. Typically, homes in foreclosure sell for less than market value. This means you’ll get less home equity, or sometimes none if your home sells for less than the mortgage. You could even end up owing more through a deficiency.
Contact a Foreclosure Attorney Today
Foreclosure can be a difficult process. Not only can it be a long and stressful process, but it can eat into your home equity.
Working with a foreclosure attorney can help you through the foreclosure process. An experienced attorney can help you through your options to avoid foreclosure and keep your home equity.
Contact Denbeaux Law today to learn more about the foreclosure process and how we may be able to help you keep your home and your home equity.
