Need to Avoid Foreclosure?
If you find yourself facing possible foreclosure and want to put a stop to it, you’re not alone. Many homeowners find themselves in this uncomfortable position. The good news is that there really are things you can do to change your situation. Let’s take a look at some steps you can take!
Don’t Forget: Statutory Reinstatement or Redemption
Many states give you, by law, the right to reinstate your mortgage (make it current) or redeem the loan (pay off the entire loan).
Typically, you must exercise them before the foreclosure sale date, although some states give you a period of time after the sales date to redeem the mortgage by paying it off in full (plus interest and costs).
If you think either of these options might work for you, pay attention to the deadlines. For example, if your state gives you only 30 days after you receive the notice of default to reinstate the mortgage, don’t let negotiations drag on past that date, unless reinstatement is clearly not in the cards.
If you do have the financial ability to reinstate the mortgage, you surely can work something out with the servicer in regard to your missed payments, given enough time. If you need a reduced monthly payment, as well as a means to make up missed payments, reinstatement won’t work; instead, you’ll need to redeem the mortgage by refinancing it at a lower interest rate.
– via Nolo.com
You Have Options!
There’s more than one way to go about avoiding foreclosure. You don’t have to sit back and do nothing! Here are just a few of the options you can pursue in finding the way to avoid foreclosure that’s right for you and your situation.
Renegotiate With The Lender
Step one is to contact your lender as soon as you know you can’t make a payment. The faster you move the more options you’ll have to fix your financial future. Borrowers may have the option of renegotiating their loan with the lender. Try to negotiate a plan that will enable the loan to be back in service. Lenders don’t want the property back; they want to keep their loan portfolio full of performing loans — not defaulting loans. Lenders say that the sooner they hear from a delinquent borrower in trouble, the easier it is to negotiate a solution.
Sell The Property
For owners who don’t care to save the property, or who have no other choice than to let the property go, selling the property may be a smart choice. If you have enough equity in the house to allow you to pay off the mortgage in full, then a sale is usually your best option. This option preserves your equity and what’s left of your credit score. Selling also leaves you in a much better financial position should you want to buy another home in the future. Even if you don’t have equity, you may be able to arrange a short sale, where the bank agrees to forgive the mortgage debt for less than the total amount owed on the mortgage if you sell the property to a third party. The advantage to the lender is that it does not have to deal with costly foreclosure proceedings.
Deed In Lieu Of Foreclosure
For homeowners who have no opportunity to reinstate, redeem or even sell their property and just want out of the property, a deed-in-lieu of foreclosure may be viable option. Essentially, a deed-in-lieu of foreclosure is a transfer of title from a borrower to the lender, which the lender accepts as full satisfaction of the mortgage debt. With this option, you as a borrower voluntarily “give back” your property to the mortgage company. You won’t save the house, but you do avoid the trauma of foreclosure and reduce the negative impact on your credit.
– via Real Estate Guides
Do you have any tips to help others avoid foreclosure?