Ways to Stop Foreclosure
If you find yourself unable to pay for your mortgage due to loss of job or any other unfavorable financial situation you may be facing foreclosure by your lender. What is foreclosure and what impact it has on you?
Foreclosure is the legal process by which a lender tries to recapture the amount owed on an unpaid loan by taking ownership of the mortgaged property. A foreclosure is a significant negative event in your credit history that can lower your credit score considerably and has a long-lasting consequence.
A foreclosure on your credit report may limit your ability to qualify for credit, new loans, housing, and even potential employment for several years afterward.
Foreclosure can usually be avoided with several options:
1. PERSONAL LOAN
If your financial hardship is only temporary consider borrowing money from your family or taking a personal loan from the bank. This may be an easy step, but make sure that you can afford to re-pay your new loan.
3. LOAN MODIFICATION
Applying for loan modification could be another option. If you are approved by your lender, you can have lower and more affordable monthly mortgage payment. Loan modification could mean extending the length of your mortgage term or changing from an adjustable rate to a fixed rate loan.
5. RENTAL
If your mortgage escrow payment is lower than market rent of your house – consider renting it out. This option may help you get some time to improve your financial situation and get back in your house at some point in the future. This option comes with responsibilities of managing tenants.
7. SUBJECT TO
This option is ideal for those, who have little to no equity in their house or owe more than the property is worth. Basically, the buyer purchases a house from you subject-to
existing mortgage. This option allows you to be released of a burden of paying for the mortgage, get top dollar offer, and sell your house fast.
2. LIST WITH AN AGENT
If you owned your house for a while and have enough equity consider listing it with an agent before you go through foreclosure. Typically, the property must be in good condition in order to sell fast and for you to get top market value. Keep in mind that listing with an agent may take between 2-6 months.
4. FORBEARANCE
In another option, where lender agrees not to exercise its legal right to foreclose on a mortgage, and you agree to a mortgage
plan that will give you time to bring you current on your payments.
6. CASH OFFER
If you have enough equity in your house and need to sell it fast consider getting a cash offer from an investor. This option also comes with additional benefits, such as you do not have to do any repairs and or pay for agent fees and closing costs, which can add up to 10%-15% of the sell price. This option also allows for fast close time, typically between 15-45 days.
8. BANKRUPTCY
This option would stop the foreclosure process and give you some time. You still owe all your debts, but government prevents creditors from coming after you. Typically, you will work with creditors to create a reasonable plan for dept repayment. Keep in mind that bankruptcy does have a negative impact on your score for a long time