Avoiding Foreclosure

Don't panic if your home is in danger of being foreclosed upon. Anyone with a government-backed loan provider or built-in mortgage insurance such as an FHA loan, should have the ability to avoid foreclosure.

Your Options To Prevent A Foreclosure

 

Reinstatement

 

Reinstatement allows you to pay the mortgage amount in a lump-sum payment, which may include interest or penalty charges.

 

Short Refinance

 

A short refinance may allow the lender to forgive a portion of your debt and refinance any remaining debt with a new loan.

 

Forbearance

 

Sometimes, a temporary financial problem, such as a medical issue or sudden decrease in income, can prevent you from making your mortgage payments on schedule. If your lender believes you have a valid reason for the missed payments, it might grant you a waiver.

Your financial situation may dictate that your lender will accept a temporary reduction in your payments or even suspend them for a set period. To secure the agreement, you must assure your lender that this new repayment plan will be adhered to.

 

Modification of a Mortgage

 

Loan modification allows you to refinance or extend the term of your mortgage loan. Lenders may agree to monthly mortgage payments that you can afford. To qualify for this option, you must convince your lender that your financial problems are temporary and will soon resolve.

 

Hard Money Loan Refinance

 

If your lender considers you a high-risk borrower, it may not approve your loan refinance request. To stop foreclosure, contact a private lender for a hard cash loan. These loans typically have high interest rates and fees but could help you buy the time you need in order to avoid foreclosure.Private lenders as hard money loans should not be used to refinance your mortgage. The fees and interest rates are very high.

When A Foreclosure Is Certain

These are some ways to avoid foreclosure if your financial situation is dire.

 

Pre-Foreclosure Sales:

If your finances are in serious decline, you may be able to sell your house for less than what is required by your mortgage loan. This alternative may only be available if your mortgage payments are not up to date by the lender or you have fallen behind for a certain amount of time. You may also be required to sell your house within a certain time frame.

You can sell your home to a friend, investor, or another person who will lease it to you if you are unable to move. This is best done by signing a lease or contract that contains an "option-to-purchase" clause. This allows you to buy your home back once your finances are better. This alternative comes with significant risks. The investor could borrow against your property, or even sell it, while you lease it.

Deed In Lieu Of Foreclosure:

You can also give your property to the lender to be forgiven. If you cannot sell your house before foreclosure, you will be eligible for a deed in lieu thereof. This option has one advantage: you can be rescued from foreclosure and any bad credit history that will inevitably result from it. Bankruptcy won't usually buy you enough time for debt consolidation; it will often delay the inevitable.

Bankruptcy:

Many believe that filing bankruptcy can be a great way to avoid foreclosure. However, bankruptcy is a way to delay foreclosure and perhaps buy you time to catch up on your debts.

After the bankruptcy-initiated suspension has been lifted, the lender may ask for the full payment. This could require you to apply for a loan refinance. The chances of you getting a refinance loan are slim because of your negative credit score.

The Summary

It is your responsibility as a homeowner to make sure that your home doesn't go into foreclosure. Avoiding situations that can lead to foreclosure is the best way to avoid it. Your chances of being foreclosed are increased by excessive debt, adjustable rates, exotic mortgages, inadequate emergency resources, lack of insurance, and purchasing a house you cannot afford.

Sometimes, financial difficulties can prevent you from making your regular mortgage payments. It is important to inform your lender immediately if this happens. Most lenders will work with you to help you catch up. Lenders are often reluctant to foreclose on your home unless it is a last resort due to the time and costs involved.

Go Back To The Foreclosure Overview Now.

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