Going through a foreclosure is an emotional process, but foreclosure doesn't always mean you must lose your home. In some states, you have the right to buy back your home within a specified length of time after the foreclosure is final. State laws vary, but if you can come up with the necessary funds, you might not have to lose your house.
How It Works
All states give you an option to redeem your house before the foreclosure is final. This means you can pay the balance in full or work out an affordable payment plan with your mortgage company. If this is done anytime before the foreclosure occurs, it halts the process. After the foreclosure happens, some states give you another chance to pay your loan balance in full, plus fees and interest. If you are able to do that, you can have your house back. If the property was purchased from the bank at auction, you might have to reimburse the buyer for any repairs or upgrades made to the house during the redemption period.
Length of Time
Not all states offer a right of redemption. Florida, for example, does not let you reclaim your home after the foreclosure is final. In some cases, states only offer a short period, such as 30 days, for you to pay off your loan balance. Other states, such as Michigan, allow you up to a year to reclaim your home.
States often add conditions to the right of redemption process. In Missouri, for example, the right of redemption only exists if the bank takes possession of the home at the time of foreclosure. If the home is purchased by someone else during the foreclosure auction, you no longer have any right to reclaim your house. You also must follow proper procedures to inform the mortgage trustee before or at the sale that you plan to redeem your home.
Living in Your Home
In most cases, after the foreclosure is final, you don't have to leave immediately. Technically, you don't have to leave until the bank or a buyer serves you with an eviction notice. This means living in your house payment-free until someone else is ready to take possession of it. Even in states with no right of redemption, this can often take a year or more. In most states with right of redemption laws, the new owner isn't allowed to take possession of the property until the redemption period ends. This means you can live in the house until that time expires, without needing to make payments. If you damage the home during the redemption period, the new owner can take legal action to recoup payment for the damages, so talk to an attorney to make sure you understand your rights in your state.
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