Options that can save your home from foreclosure
It is totally on you to take the steps that are necessary to save your home from foreclosure. Staying away from huge mortgages, taking less debt, and buying an affordable home are ways to reduce the risk of facing foreclosure. It is essential to work out your finances before you purchase a home. It is also crucial that you work out the mortgage term that deems fit for you.
Even after planning your mortgage perfectly, some financial setbacks may not be in your control. When such a situation arises, you should not delay informing your lender or housing counselor about it. In most cases, the lender would agree to help you and stops foreclosure.
Foreclosure is stressful, but you can come out of it.
It is a dreadful experience to deal with the receipt of a foreclosure notice. It is a depressing feeling to lose your home. However, the truth is that foreclosure works only for a few.
Do not ignore the messages you receive from your lender but instead, look at these ways to save your home from foreclosure.
Here is how to save your home from foreclosure
If your real estate investment is at risk of foreclosure, instead of panicking, it is time to take action. Here are some of the available options to save your home from foreclosure if you have taken your loan from a provider who is backed by the government. There are also choices for those who have taken a loan from a built-in- mortgage insurance like the FHA loan.
If you are behind on the mortgage payments, then you can choose a reinstatement option. This lets you pay the mortgage amount as a lump sum payment. The payment will include the penalty charges and the interest amount. This needs to be paid off at a set date to save your home from foreclosure.
- Short Refinance
In this option, the lender agrees to forgive some part of your mortgage amount. The remaining debt will be refinanced into a new loan.
You can save your home from foreclosure by choosing the forbearance option if your condition is caused by short-term financial trouble. It could be because of a sudden loss in income, job loss, or a medical emergency, which does not let you pay your mortgage amount on time. If the lender feels that your situation is genuine, he would be ready to help you and grant you a forbearance. As per your financial status, the lender would agree to a repayment plan. It would either lower your monthly payments or even suspend payment for some time. However, you have to assure your lender that you will ultimately abide by the new repayment scheme.
- Mortgage Modification
You could also opt for a loan modification to save your home from foreclosure. It lets you refinance your loan or extend its term. The lender would agree to settle on a monthly mortgage payment based on what your financial condition is. To benefit from this plan, you need to assure your lender that your financial trouble will soon be resolved as it is temporary.
- Use hard money to refinance your loan.
If the lender thinks of you as a high-risk borrower, he would not be ready to refinance your loan. In such a case, to save your home from foreclosure, you can contact a private lender to borrow hard money to refinance your mortgage loan and stop foreclosure. A private lender would charge you high interest rates and astronomical fees, but it allows you to buy time and avoid foreclosure. This, however, should be your last option if none of the other methods work out.
What are the options when foreclosure is unavoidable?
If your situation makes it inevitable to stop the foreclosure process, you can take these steps.
- Pre-Foreclosure Sale
If you are convinced that there is no other way to save your home from foreclosure, then the last resort would be to sell off your home.
You will have to sell off your home at a lesser amount than what you had to pay towards the mortgage loan. This option is available only when you have defaulted on the mortgage payment by a few months or as the lender specifies. You will have to sell your home in a specific period.
If you cannot move out, you may want to sell off your home to an investor or a relative and lease it. You may discuss these terms with the buyer and see what best works for both of you.
- Deed in Lieu of Foreclosure
This is another way to save your home from foreclosure. Here you willingly give the house to your lender.
In return, the lender pardons your debt. This option is available only if you are not able to sell your home before the foreclosure. The advantage of the lieu of foreclosure method is that you have been saved from foreclosure and a bad credit record.
- Short sale
If your home’s value is less than the amount that you owe, then the short sale could be an option. A short sale will affect your credit, but it is not as bad as going for a foreclosure. You will have to negotiate with your lender and see if he agrees to a short sale.
Bankruptcy does not buy you a lot of time and only postpones the foreclosure. It is not one of the best ways to save your home from foreclosure.
Once you file bankruptcy, the lender would ask you for the full payment for which you would have to refinance your loan. However, since you are filling for bankruptcy, getting a refinance loan is almost nil, thus leaving you with a negative credit score.
You may contact the HUD approved housing counselor. And if you decide to sell your home for cash, connect with us to buy your home and save you from foreclosure and a bad credit score. We settle the payment towards your home in almost 5 days. You can then use this money to pay off the mortgage loan amount. Later whenever your finances improve, you can take another mortgage loan to finance your new home.