Foreclosure can be a scary, overwhelming process for many homeowners. Some might not fully understand what foreclosure is or why it happens. More importantly, since it varies from state to state, people in Birmingham, Alabama may not realize the specific effects of the foreclosure process.
In today’s blog post, we’ll go over what the foreclosure process looks like in Alabama and how it impacts people. Then, we’ll go over a solution to help you avoid the foreclosure process. Let’s get started!
How Do Foreclosures Work in Birmingham, Alabama?
A foreclosure begins when you miss or skip mortgage payments. In Alabama, both judicial and nonjudicial foreclosures are allowed, but nonjudicial foreclosures are more common.
When you have a mortgage, you are obligated to make the payments on the loan. If you don’t make those payments, the lender has the right to sell your home and recoup the money you had received in your loan. So, how does this work?
First, your loan provider or servicer will charge a late fee after your grace period is over, which is usually a 10-15 day window but varies by provider. If you’ve missed a few payments, you’ll receive letters and possibly phone calls from your provider where you can pay the missed fees and discuss mitigation options to avoid foreclosure.
Please note that during the COVID pandemic, if you are experiencing financial hardship due to the pandemic, you can ask for a suspension of payments called a forbearance of around one year under the CARES Act.
Next, your lender will send you a breach letter, which tells you that your loan is in default. From there, if you don’t take action, the foreclosure process will take place, usually around 120 days from receipt of that letter.
Another thing to note is that Alabama allows for a redemption period of one year, giving homeowners a year to redeem the home after a foreclosure sale. If your home was mortgaged after January 1, 2016, new Birmingham AL law provides a 180-day redemption period. This redemption period, in both cases, will usually be taken away if you do not move out when prompted by the loan provider.
Impacts of Alabama Foreclosures
When you experience a foreclosure, you’ll obviously lose out on money and a home. Instead of recouping money from purchasing a home when you sell the home, you lose the home and all of the money you have paid back on the loan. You might be evicted from your home, which causes stress and uncertainty of not knowing where you will go from there.
You can expect to have to wait between 3 and 7 years minimum to try and purchase another home with financing after going through the foreclosure process. You’ll need to demonstrate in the future that you can pay all of your bills on time and that you haven’t acquired more debt.
This also negatively impacts your credit score. You’ll need to work hard to repair your credit after a foreclosure so as to not experience lasting consequences. Otherwise, a foreclosure will affect your ability to get new housing, financing, or even employment.
You may lose any relocation assistance or leasing opportunities, along with other support options. After a financial hardship and loss like a foreclosure, these options are sometimes the only lifeline, so this is incredibly important to avoid.
Luckily, you can avoid the foreclosure process altogether when you take the right preemptive action! Here’s how.
A Better Way to Sell Your Home During the Spring
The foreclosure process can be really overwhelming and impact homeowners in Alabama in negative ways.
There is a way to avoid foreclosure and sell your home quickly. If you want to avoid the hardships of the foreclosure process, we’re here to help. At Home Buyers Birmingham, we help people who need to sell their homes quickly for a variety of reasons, including foreclosure.
Whether you’re faced with an impending divorce, foreclosure, your job moving, a death in the family, or you’re overwhelmed managing a rental property, we have the experience to buy your home fast and pay you cash in as little as 7 days.
If you’re worried about experiencing a foreclosure, we can remove the burden, and you will walk away with cash in your pocket and peace of mind.
If you’re ready to sell your home in Birmingham or any nearby areas, call us at 205-687-0604 to get connected with a representative from our office. We’ll provide you with a fair cash value offer within 24 hours at no cost or obligation to you.
Home Buyers Birmingham
1821 11th Avenue South Suite #55331
Birmingham, Alabama 35205