Sometimes as a homeowner, you may come across difficulties in making your mortgage payments. Foreclosure is usually a distressing family financial experience. Doing nothing is the worst you could do when you fall behind your mortgage payments since your lender could ensue with a foreclosure even if you refuse to appear be a participant in the legal action. There are several options which may assist you to avoid a foreclosure especially by being proactive. Here are some options to consider:
1. Reinstatement
This is one of the most effective solutions to foreclosure but also the most difficult. Reinstatement involves paying a lump sum of money so as to bring the loan current. The borrower brings the delinquent loan current through a single payment. This halts the foreclosure since the homeowner has caught up with the payments. You must find out the amount needed for reinstatement by requesting the reinstatement quote or letter. The quote indicates the back and current payments due and other costs applicable late fees. The period of reinstatement is usually on the last business day of the sale date.
2. Forbearance
The lender may allow you to decrease or suspend your loan payments for a specified short time so that you can draw level with the payment schedule. This option is a short term modification of your mortgage payments and very helpful if your income fluctuation is temporary. You can contact your lender to discuss the forbearance option and the terms and conditions thereof.
3. Repayment Plan
A repayment plan will involve you negotiating with your lender for you to spread out your due amount over several months so that you can bring your loan current. The repayment plan is the best option if you are ineligible and are not willing to refinance and when you are facing a short-term financing challenge as well as being several months overdue in your payments. Once you qualify for this plan, your past due loan amount is spread over an agreed time frame.
4. Mortgage Modification
This option involves the reduction of the loan terms such as the interest rate, the loan principle or the terms of the mortgage. This can bring about a better and cheaper mortgage plan for you if you have long-term financial difficulties. Your mortgage lender will change one or two of the loan terms for you and make the payments more affordable. There are two types of mortgage modifications, the internal modification and the Home Affordable Modification Program (HAMP).
5. Selling your Home
One of the fastest (and simplest) ways to stop a foreclosure is to sell the house! It may not be the easiest, because you will likely have to move (not always- depending on who buys the house)- but it can prevent the very negative affects a foreclosure will have on your credit score.
Surprisingly, lenders hate foreclosures as much as you do. For them, it also means legal, financial and public relation headaches. So, even if you owe more than the house is worth- you can look into doing a “short sale.” The lender does not want to lose money on mortgages, but they also don’t want to waste time and money on foreclosure, owning and sale of your property. For this reason, many of them will readily agree to a short sale, whereby you can sell your home for less than you owe so as to avoid a foreclosure. There is another blog post giving more details about short sales. A short sale will save you from foreclosure and the impact to your credit score as a result of a foreclosure.
At JB Property Solutions, we can also often offer credit restoration help if we buy your house. You can sell your house even if you owe more than it is worth, or have multiple mortgages or liens against the property. It doesn’t hurt to see what options are available to you. We always offer multiple options with zero pressure. We are also glad to refer you to other professionals if you’d prefer that. Please contact us today- there is no cost to you.
Photo credit: http://markherder.com/foreclosure.nxg