Ways to Avoid Foreclosure
Foreclosure is a serious matter for homeowners to face. If you fail to make your home mortgage payments, foreclosure may occur. Foreclosure is the legal means that your lender can use to repossess (take over) your home. When this happens, you must move out of your house. If your property is worth less than the total amount you owe on your mortgage loan, a deficiency judgment could be pursued. If that happens, you not only lose your home, you also would owe your lender an additional amount. Both foreclosures and deficiency judgments could seriously affect your ability to qualify for credit in the future.
At Swift Realty, we understand that people can at any time encounter unforeseen situations which may affect their ability to pay their mortgage in a timely manner. Contributing factors such as temporary job loss, medical illness or injury, marital difficulties, forces of nature, unforeseen repairs, or even a death in the family can cause unfortunate financial hardship. Regardless of the circumstances, home foreclosure should and can often be avoided, with a little effort. Most homes can be saved from foreclosure by simply taking the proper action. Avoiding foreclosure is a simple matter of reacting early on and making the right moves.
The following tips may help avoid foreclosure.
If you are unable to make your mortgage payment:
1. Don't ignore the problem.
The further behind you become, the harder it will be to reinstate your loan and the more likely that you will lose your house.
2. Contact your lender as soon as you realize that you have a problem.
Lenders do not want your house. They have options to help borrowers through difficult financial times.
3. Open and respond to all mail from your lender.
The first notices you receive will offer good information about foreclosure prevention options that can help you weather financial problems. Later mail may include important notices of pending legal action. Your failure to open the mail will not be an excuse in foreclosure court.
4. Know your mortgage rights.
Find your loan documents and read them so you know what your lender may do if you can't make your payments. Learn about the foreclosure laws and timeframes in your state (as every state is different) by contacting the State Government Housing Office.
5. Understand foreclosure prevention options.
Valuable information about foreclosure prevention (also called loss mitigation) options can be found online.
6. Contact a HUD-approved housing counselor.
The U.S. Department of Housing and Urban Development (HUD) funds free or very low-cost housing counseling nationwide. Housing counselors can help you understand the law and your options, organize your finances and represent you in negotiations with your lender, if you need this assistance.
For those individuals who have trouble making mortgage payments on their home and fear foreclosure, it is important to know about other alternatives which may be recommended besides the dreadful foreclosure.
Alternatives to Avoid Foreclosure
Options To Retain Your Home:
The following options will result in you retaining ownership of your property.
1. Repayment Plan: This usually involves establishing a schedule with your Lender to make a full regular monthly payment plus a little extra each month, to repay the delinquent amount over a specified period of time.
2. Special Forbearance Plan: This option may provide for a temporary reduction or suspension of payments that will be increased at a later point to repay the delinquent amount over a specified period of time. Mortgage lenders will only allow forbearance if you can prove you'll eventually acquire funds. Some common examples would be a tax refund or a bonus where you can show future earnings that can bring your mortgage up-to-date.
3. Mortgage Modification: A loan modification is the changing of one or more terms of a mortgage in order to help a homeowner bring a defaulted loan current and stop foreclosure. This option may allow you to refinance the debt and / or extend the term of your existing mortgage loan.
As a foreclosure prevention alternative, modifications may involve:
Implementing a step plan interest rate
Extending the term of the mortgage
Reducing the interest rate on the mortgage
A combination of the above to "stop my foreclosure"
Loan modifications should be considered for homeowners who:
Have experienced a hardship resulting in a reduction of income that affects the ability to pay the mortgage payments.
Have demonstrated the ability to recover from the hardship and now have a source of stable monthly income. Want to retain ownership of the property.
4. HUD Partial Claim: If your loan is an FHA insured loan, your lender may be able to obtain a one time payment from the FHA-Insurance Fund. With this payment alternative, the Department of Housing and Urban Development would help the homeowner bring their mortgage up to the current balance by paying the money which is overdue.
5. Refinance: This option may allow you to use the equity that you have established in your home to pay the delinquent amount. Depending on the interest rate of your new loan, your monthly payments might be reduced. You can explore refinancing with your existing Lender as well as with any Lender of your choice.
6. Redemption: Redemption is a period after your home has already been sold at a foreclosure sale when you can still reclaim your home. You will need to pay the outstanding mortgage balance and all costs incurred during the foreclosure process.
Many states have some type of redemption period. The redemption period and availability is often determined by whether the foreclosure is judicial or non-judicial. And, timelines and procedures can vary greatly from state to state. You can find specific information about the redemption period of your state (if applicable) by reading the state laws on foreclosure.
Options To Dispose Of Your Home:
In situations where you do not want to retain ownership of the home, the following disposition options may be available as an alternative to Foreclosure. These options affect your credit rating less than a Foreclosure will.
1. Sell The Home: If there is sufficient equity in the property, you may be able to receive more for your property than what is due on the mortgage loan.
2. Assumption: With this option, you would sign over the property to another person. That person would then take possession of your home, and take over making the payments.
3. Pre-Foreclosure Sale (Short Sale): This option may allow you to sell your property for an amount less than what is necessary to pay off your mortgage loan. This is a deal between the homeowner and lender to sell the property for less than it's worth, with the mortgage lender taking the loss. Some individuals may find that selling their home is the best bet and they can do so by way of a pre-foreclosure sale.
4. Deed In Lieu Of Foreclosure: This option may allow you to voluntarily "give back" the property to your Lender without further damaging your credit.
We work with you personally to provide foreclosure help and to find a solution to help stop foreclosure on your home based on your unique situation. Dealing with lenders can be a difficult affair and you definitely need expert assistance to get a deal that works for you. This is where Swift Realty comes in. We take the time to meet with our clients and explain ALL of their options to provide comprehensive foreclosure help in order to avoid foreclosure.
Our only intention is to stop your foreclosure and if you meet our qualifications to save your home we are the experts. It is very important to make an informed decision and time is critical in order to stop foreclosure.
Take the first steps towards saving your home and contact Swift Realty to stop Foreclosure.