Wondering How To Avoid Foreclosure And Keep Your Home? Follow the Tips
If you are like other homeowners, then we know how much a home means to you. Once we sense any threat to your ownership, we are sure that you will try everything in your power to keep your home. This threat is very real when you fall behind on your mortgage payments. Foreclosure looms in the very near future. Reasons, why you are facing such a problem, could be any of the following or something else.
- Job loss or unemployment
- Illness or medical emergency
- Death in the family
- Unexpected expenditures
- Excessive debt
It is a scary situation, and you may feel that there is no way you can save your home. Moreover, apart from the fact that you can lose your home, you can also face a serious negative impact on your future credit ratings. However, it is not completely hopeless. You can take some steps to protect your home.
1. Keep the Channel Open
Until the time your house is going to be auctioned, keep the lender’s communication channels open. Many lenders prefer to work out a solution that would allow you to continue with the mortgage payments. The foreclosure process is tedious, and then they have to try and sell your home at a profit.
2. Consider Short Sale
Even after the lender initiates the foreclosure process, continue to look for a buyer. Lenders are open to reasonable short sale offers, which saves them from doing a lot of work. They will save time, effort, and money by accepting the offer. You may not save the house, but you will save your credit ratings.
3. File for bankruptcy
Once you have filed for bankruptcy, an automatic stay immediately comes into action, which stops foreclosure process. While the bankruptcy process is going on, banks or other lenders cannot foreclose or collect their money. Banks may file a motion for relief, but even then, the foreclosure process will get postponed. This is mainly a ploy to buy time urgently.
Chapter 13 Bankruptcy
It can help you keep your home by restructuring your debt. You will repay the debts over a period of years as part of the repayment plan. You will only have to pay a fraction or not even that for your unsecured debts. If nothing else, it will give you several months before a foreclosure can happen.
- Chapter 7 Bankruptcy
You may not be able to save your home, but any delay in the foreclosure process will allow you to stay in the house without making any payments. You can also open negotiations with the bank or lender to avoid foreclosure. It will also help eliminate your personal liability, so any deficiency remaining after the foreclosure is not your responsibility.
4. File A Lawsuit
If your bank or mortgage company is using any non-judicial processes to foreclose, then you can file a lawsuit. You will have to provide ample proof to the court that the lender or bank
- Violated any state laws
- Did not comply with the mediation requirements
- Did not follow all steps in the process
- Made some other serious error
However, lawsuits are expensive, and if you are unable to prove the case, then you lose a lot.
5. Apply For Loan Modification
By applying for a loan modification, you might be able to delay a foreclosure. The bank cannot proceed with foreclosure when there is an application pending. It is called dual tracking. Many states like California, Colorado, etc., prohibit dual tracking of foreclosures. If your loan modification application is approved, then avoiding foreclosure is more of a possibility.
6. Sign a deed in lieu of foreclosure
Also known as deeding the home, what it means is that you hand over your home to your lender in lieu of foreclosure. In exchange for the house, the lender forgives the mortgage and releases you from the debt. The foreclosure action is canceled once the deed in lieu is signed.
Adjustable mortgage rates cause a lot of trouble for borrowers. You start slowly, and then suddenly, the interest rates jump and become unmanageable. The interest-only loans become more expensive when you start paying the principal as well as interest. In such a situation, refinancing your mortgage can be a good option to get the mortgage payment to a manageable level.
How To Avoid Foreclosure
It would be best if you understood that most people know when they fall behind on their mortgage payment, but it is inaction or wrong action on their part, which brings them to foreclosure. If you take some timely steps, the whole process will not seem so daunting.
- Face The Problem
By ignoring the problem, you are only making it more difficult. You will keep falling behind in the payments. This will result in more chances of your losing your home. Face the problem right from the beginning.
- Contact The lender As Soon As Possible.
When you realize the problem, please don’t sit on it. Communicate with the lenders. They don’t want the house and will help you with a new repayment plan and other options during tough financial situations.
- Respond To All Mails From Lender
Any notice of default or mails you get from the lender may have some useful information. They even offer foreclosure prevention options, as well. Some mails may have important notices of legal action and other details.
- Know Your Rights
Read all documents related to the loan carefully. Understand your rights as a borrower. Different states have different foreclosure laws and timeframes, and by being aware of all these important things can help you a lot. Contact HUD-approved housing counsellors for more information.
- Look At All options.
By doing proper research, you may come across quite a lot of useful information about options to prevent foreclosure. Many government agencies, including housing and law, offer information and options.
- Review Your Finances
If you want to keep your house, then make sure to cut the spending in order to make the mortgage payments. Keep a close watch on any unnecessary expenditure.
- Contact HUD
The US Department of Housing and Urban Development (HUD) offers counsel for housing-related issues. Housing counseling can help you in understanding the law as well as your options. They can also help in reorganizing your finances.
- Other Options
If you have any assets like jewelry, real estate, or a car you can sell to monetize your mortgage payments, think about it. Can someone in the family get another job for an additional income?
- Avoid Recovery Scams
Many people end up losing a lot of money and sometimes even the house to scams. If someone tells you that they can stop the foreclosure proceedings immediately and want you to sign documents, then it is a big no. Don’t sign anything without understanding fully. Try to get professional advice from a lawyer or HUD-approved housing counsellor.
No matter what the reason, foreclosure is a terrible experience. Losing your home is a very unfortunate thing and can cause a lot of stress. Even worse is the fact that apart from losing your home, your credit rating is also seriously hurt. If you are facing this problem, you must try everything in your power to avoid it. Feel free to contact us. We can help you by buying your house and that too very quickly. No fees or commissions plus you receive cash in just 5 days. With the right information and the right approach, you can tackle this problem more effectively.