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Seven Ways to Stop a Foreclosure

July 18th, 2018 | by admin
Seven Ways to Stop a Foreclosure

When unexpected situations occur in life that leave you struggling financially, it can be hard to know what to do to get your life back on track. If you haven’t been able to pay your mortgage for months, there is a good chance that the lender will foreclose on your home and repossess it.

If the lender decides that they’re going to foreclose on your home, they’ll send you a written notice that lets you know what’s going to happen. This is not the point where you give up and just let them take your house though; there are a number of things that you can do to try to stop the foreclosure from happening and avoid ruining your credit history.

Talk to the Lender About Getting a Forbearance

When you owe money and you cannot repay it to a lender, you need to talk to them about possibly giving you a forbearance on the amount that you owe. A forbearance occurs when a lender allows you to pay a smaller amount than the amount you owe for a few months so that you can get back on your feet. The amount that you owe will still have to be paid, but the lender will not foreclose on your house.

If you have been consistent with paying your bills on time, with not late payments, this is an option that the lender may consider. You need to talk with someone directly and explain your situation to them to see if they’ll be able to work with you. Asking is always the forst thing that you’re going to want to do.

Request a Modification to Your Loan

If you know that you aren’t going to be able to make the full payments any time in the near future, you need to let the lender know. Ask if they’ll allow you to modify the loan so that you are paying a smaller amount each month but are making payments for a longer amount of time. If you have been up to date on most of your payments before you fell into hardship, they may allow you to modify the loan.

Sell the Home to Someone Else

If your home is worth more money than you owe on it, consider putting it on the market. If you can sell the home, you’ll be able to pay off the money that you owe to the lender and be out of debt altogether. It can be difficult to sell a home that you have memories in, but if it saves you from having to absolutely ruin your credit, it will be worth it in the end.

Be sure to let your real estate agent know about your current situation so that they can follow the proper guidelines when they put the house on the market. Be sure to find out exactly how much money you owe to the lender so that you can tell the real estate agent the minimum amount you can accept at closing. This ensures that the real estate costs and all mortgage debt will be paid off when the home sells.

Sell the Home Through a Short Sale

Many homeowners choose to use a short sale to prevent foreclosure. A short sale occurs when a home is sold for less than what is owed on it. The lender has to agree to allow the home to sell as a short sale and can deny an offer that is made by a potential buyer if they feel that it is too low. They can also require you to pay off the remaining balance after the home sells. Your payments will be far less than you are currently paying, but it will help you to be able to avoid a foreclosure.

You can have a real estate agent list the house for you so that you do not have to worry about dealing with potential buyers or handling any of the paperwork. The agent will know how to market the house and ensure that you get as much for it as they can. This allows you to have as little to repay the lender as possible after the home sells.

File Bankruptcy to Avoid a Foreclosure

If you don’t owe a lot of money on your home, claiming bankruptcy may be a great option for you. It may allow you to keep your home, without having to deal with the hassle of a foreclosure. It’s best to talk to a bankruptcy attorney to find out what your options are and to determine what type of bankruptcy you should file.

It can take some time to file all of the necessary paperwork for a foreclosure, so it’s in your best interest for you to file as soon as you can so that you can beat the foreclosure process.

Refinance Your Home

You can apply to refinance your home with another lender when you start to struggle financially. If you have made improvements to the home or owe a minimal amount, you may be able to refinance the loan. This can allow you to make smaller payments each month and pay a lower interest rate which will save you money in the long run. It’s important to realize that when you agree to refinance your home the repayment period begins on that day, not the day that you got the first loan for the house. The refinance company will pay off the money you owe to the first lender and you will only have to make payments to them.

Turn the Home into a Rental Property

If you need money quickly to pay off the lender and are not living in the home, consider using it as a rental property. You can require tenants to pay first and lasts months rent and a security deposit. The money that you get each month for rent can then be used to pay the mortgage directly. You can talk to the lender about your situation and they may allow you to get a small forbearance for a month or two so that you can get tenants into the residence.

There are stipulations in every state regarding rental properties so take the time to make sure to find out what they are for your state before you start renting out the property. You want to make sure that you do everything by the books so that you don’t get in trouble for having an illegal rental property.

You may need to get the home inspected to make sure that it is a habitable property, may be limited on how much you can charge for it, and may have to meet certain stipulations in order to be a landlord.

Avoiding the lending company altogether is not a good idea. Contact them as soon as you get the notice to discuss the options that are available to you. Once your house is foreclosed on, it will be gone forever and there will be nothing you can do to get it back. You want to be sure to make every effort to stop the foreclosure process so that your credit does not get destroyed after everything is said and done.

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