How to Stop Foreclosure Borrowing Money From a Local Investor

The threat of foreclosure can be a haunting reality for many homeowners. It’s a situation that can leave individuals and families fearing the loss of their homes, the heart of their stability. However, solutions do exist. One of these solutions is borrowing equity from your home or seeking hard money loans. Today I’ll discuss these options and how they can be a lifeline to you as a homeowner if you’re facing foreclosure. Learn more about stopping foreclosure by borrowing money from an investor.

Stop Foreclosure Borrowing Money From an Investor

The Foreclosure Landscape

Before we delve into the solutions, let’s take a look at the current foreclosure landscape. According to ATTOM Data Solutions, the first quarter of 2021 saw foreclosure filings—default notices, scheduled auctions, or bank repossessions—hit an all-time low since they began tracking this data in 2008. However, this dip is more of a product of government foreclosure moratoriums amidst the COVID-19 pandemic rather than an indication of a healthier housing market.

As these moratoriums lift, experts predict a sharp increase in foreclosure rates. RealtyTrac reports that 1 in every 2,253 homes in the US received a foreclosure filing in August 2021. This looming threat underscores the importance of understanding the tools available to homeowners.

Borrowing Equity from Your Home

For homeowners with a substantial amount of equity in their homes, borrowing against this equity can be an effective way to avoid foreclosure. Equity is the difference between what you owe on your mortgage and what your home is currently worth. If your home has increased in value since you bought it, or if you’ve paid down a significant portion of your mortgage, you likely have equity that you can tap into.

The Federal Reserve Bank of St. Louis reports that American homeowners’ equity has reached a record high, with over $16.5 trillion in the first quarter of 2021. Yet, a surprising number of homeowners are unaware of this resource. A CNBC study found that nearly half of homeowners don’t understand what a home equity line of credit is.

Home equity loans and home equity lines of credit (HELOCs) allow homeowners to borrow against their home’s equity. These funds can be used to pay off the defaulted mortgage, effectively stopping the foreclosure process. However, it’s important to note that this strategy does increase your debt and requires you to use your home as collateral. This means if you default on the home equity loan or HELOC, you could still lose your home.

Hard Money Loans

Hard money loans are another option for homeowners facing foreclosure. These are short-term, high-interest loans provided by private investors or companies. The advantage of hard money loans is that they are relatively quick to obtain and are primarily based on the value of the property, not the borrower’s credit.

The Mortgage Bankers Association reports that as high as 6% of loans in the US are hard money loans. These loans can be an effective tool for stopping foreclosure in its tracks. However, the high interest rates and short repayment periods make this a potentially risky option. It’s crucial to have a clear plan on how to repay the loan to avoid further financial difficulties.

Understanding Office of Recovery Services (ORS) Lien

The Office of Recovery Services (ORS) Lien is a mechanism established by the government to recover unpaid child support or other public debts. This lien can be placed on the debtor’s real estate, including their home, making it a significant concern for homeowners.

If an ORS lien is imposed on your property, it could put you in a precarious financial situation, potentially leading to the need for additional funds. This is where hard money loans or tapping into home equity can come into play.

Hard money loans, provided by private investors or companies, could offer a swift financial solution. While these loans come with high interest rates, they are primarily based on the property’s value, making them accessible for homeowners with an ORS lien.

Alternatively, if there’s significant equity in your home, you might consider borrowing against it. Home equity is the difference between your home’s current market value and the balance of your mortgage, which could serve as a financial lifeline in dealing with an ORS lien.

How I Can Help

Foreclosure is a daunting prospect, but it’s important to remember that options exist. Borrowing equity from your home or seeking hard money loans can provide the funds necessary to halt the foreclosure process. However, these strategies do come with their own risks and should be considered carefully. It’s crucial to get advice from a knowledgeable professional. I invite you to reach out to me here, Gary, your local trusted home buyer in Utah. I can discuss with you the possibility of obtaining a hard money loan and whether this might be a suitable solution for your situation.

Gary Parker

I was a part owner in an electrical contracting firm in the late 1990’s and started to get interested in real estate around 2001. My business partner and I bought our first rental property in 2002. From there we did several real estate transactions until we decided to close the electrical business and part ways. In 2009 I started Gary Buys Houses which is owned by my wife, Eileen, and I. I felt like I could offer one on one personal service to people that wanted to sell their house quickly or not worry about repairs and such. Today, I have built a reputation of being fair and honest with people no matter their situation, so the business continues to help people and be successful. I have been married for 34 years, and have one son, two step sons and 4 grandchildren. I like to travel and spend time in Southern Utah exploring.

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