Texas Foreclosure: Which Option Best Protects Your Equity

If you're behind on mortgage payments in the Houston area, you’re not out of options.

But how you act next could decide how much equity you get to keep. In Texas, foreclosure moves fast. Whether you try to catch up, work out a new plan, or sell the home, each option affects your equity differently. This post breaks it all down so you can protect what you've built.

Not sure which path fits your situation? Call 832-500-8246 or book a free equity review through our Second Chance Program calendar

Why Equity Matters in a Texas Foreclosure

Equity is the part of your home’s value you actually own, the money left over after paying off what you owe. In a rising market like Houston, that can be tens of thousands, even hundreds of thousands of dollars.

But once a foreclosure auction happens, all of that can vanish.

Texas follows a nonjudicial foreclosure process, which means lenders don’t need a court order to sell your home. Once the Notice of Sale is posted, you might have just 21 days to act. Wait too long, and the property goes to auction, where it could sell for less than its value, with little or none of that equity coming back to you.

Learn more about this process from Texas State Law Library.

Option 1 – Reinstatement: Catch Up in One Shot

Reinstatement means paying all past-due payments, late fees, legal fees, and interest in one lump sum to bring the loan current.

How it protects equity:

You keep the home and stop the foreclosure completely. You maintain full control over when and how you sell later.

What to watch out for:

Lenders don’t have to accept partial payments. It’s all or nothing. You may need help from a loan, gift, or outside funds to cover the full amount.

Best for:

Homeowners with strong equity and access to immediate cash who want to keep the property.

Option 2 – Repayment Plan: Spread the Arrears

This is when your lender agrees to let you pay off the missed payments gradually, while also resuming your regular monthly payments.

How it protects equity:

Stops the sale if approved. Lets you keep the home and any future appreciation.

What to watch out for:

Not guaranteed. The lender has to agree. Can strain your monthly budget since you’re paying more than usual for a set period.

Best for:

Steady income and only a few missed payments. Willingness to negotiate and document hardship.

Option 3 – Sell Before the Auction: Exit With What’s Yours

If keeping the home isn’t possible, selling before the foreclosure date can let you pay off the mortgage, avoid the sale, and walk away with your equity.

How it protects equity:

You decide the sale price, not the auction. You avoid legal fees and the damage of a foreclosure on your record.

What to watch out for:

Time is critical. You need to sell and close before the auction date. Pressure sales can lead to lower offers if not managed well.

Best for:

Homeowners with strong equity but no viable path to catch up payments.

Example:

• Houston home value: $285,000

• Loan balance: $190,000

• Missed payments + fees: $12,000

• Equity: about $83,000

Reinstate: Keep all equity, minus reinstatement funds.
Repayment: Keep home and equity if payments stay current.
Sell now: Pay off loan, keep $70K–$80K depending on sale price and costs.
Do nothing: House sold at auction. You may get little or none of that equity back.

Which Option Fits Your Situation Best?

Ask yourself:

• Do you have cash or credit access to reinstate?

• Can your income support a higher monthly payment?

• Is your lender open to a new plan?

• How much equity do you stand to lose if the auction happens?

If the answer to all of those is no, selling early may be your cleanest way out — and your best chance to preserve your equity.

Check your equity status now with the Second Chance Program

What to Do Right Now If You’re in Pre-Foreclosure

• Check for any posted Notice of Sale at your home or in county records.

• Don’t wait. The clock doesn’t stop.

• Talk to your lender to ask about reinstatement or repayment options.

• Get a clear picture of your equity and timeline.

Amroc’s Second Chance Program helps Houston homeowners review their options and protect their equity before the foreclosure clock runs out.

Call 832-500-8246 or book a time here

Frequently Asked Questions

Can I reinstate my mortgage at the last minute in Texas?

Yes, but time is tight. After the Notice of Sale is posted, you may only have about 21 days. After the auction, it’s too late.

Will a repayment plan stop a foreclosure in Texas?

Only if the lender approves it and you meet the new terms. Until it's finalized, the foreclosure process usually keeps moving.

If I sell my house before auction, do I get to keep the equity?

Yes, as long as the sale closes before the auction and there are no major liens. Selling early is key to preserving your equity.

What’s the fastest way to stop a Texas foreclosure?

Reinstating the loan in full stops the foreclosure completely. Filing for bankruptcy pauses the process temporarily through an automatic stay, but it does not cancel the debt or the foreclosure permanently. However, both have trade-offs. Selling can also work, but only if done early enough.

Disclaimer

This article is for general education. It is not legal, financial, or tax advice. Timelines and procedures can vary by location and case. Consider speaking with a qualified professional about your situation.

For foreclosure assistance programs, also visit CFPB Housing Help