Learn How to Avoid Foreclosure
Have you found that due to unfortunate or unforeseen circumstances, you are unable to make your mortgage payments and need to know how to avoid foreclosure? Lenders don’t want to foreclose on your property, but in protecting their interest, they may have no other choice if you do not respond to their calls or letters. The key to how to avoid foreclosure is to communicate with your lender, so they won’t file a default notice. Once the lender has filed the notice of default, you will only have 20 days in which to respond and stop the foreclosure. If you don’t respond, you will be found in default, and the foreclosure process will begin, and eventually your home will be sold at auction.
How to Avoid Foreclosure Tips
If you start communicating with your lender, he may offer you several options to help you avoid foreclosure. Listed below are some alternatives to foreclosure:
- Catch up the delinquent payments, plus any interest that is owed. This option is often difficult, because homeowners who get behind due to unforeseen circumstances causing financial hardships don’t usually have the resources to catch up their payments.
- Repayment plan is another alternative to foreclosure. If your credit has been good prior to this event, your lender may modify your loan so that an additional amount, such as $100, is added to your current payment each month until the amount is arrears is caught up. This plan can only work if you are currently employed.
- Another alternative to foreclosure is a loan modification, when your current financial hardship has made it impossible to make your full payments. This option is when your lender agrees to restructure your loan, making it more affordable. Sometimes this process includes a reduction in the principal or rate, or it can include a payment reduction for a specific period of time; however, you must make your payment on time. The government has several loan modification programs available, which can be found on the Internet.
- If you are currently employed and your credit has been good prior to your default, you lender may offer to refinance your loan by adding the arrearage to the new loan.
- Another step in how to avoid foreclosure is to consider a short sale and discuss this with your lender. A lender will sometimes consider a short sale if your mortgage is higher than the actual value of your home. Your home will not go into foreclosure, and you are able to pay the agreed to amount of the short sale to your lender. In most cases, you will not be responsible for the remainder of the mortgage. This option will affect your credit score much less than a foreclosure would, and it is a much faster and easier process for your lender and for you.
- Another alternative to foreclosure is a deed in lieu of foreclosure. This process is when you actually give your deed to your lender, which relieves you of the remaining debt on your mortgage. This will stop foreclosure, and you won’t have to go through the stressful court process. This process will not affect your credit score in the way that a foreclosure would and allows you to repair your credit and your financial condition much quicker.
Communicating with your lender and discussing the ways on how to avoid foreclosure is the easiest, quickest and less stressful way to get back on the road to financial recovery!