The current economic trends mean that many homeowners are still at risk of losing their homes to foreclosure. In recent years, foreclosure is the most common way that families lose their homes. Luckily, you can avoid foreclosure by knowing the proper precautions to take and following through with them.
You will notice that some of these actions require more advanced planning than others. That said, there are still plenty of options, even if you are on a time crunch.
Work With the Lender
Most lenders do not want to foreclose on your home. They will almost always lose money in the process, which encourages them to offer you other solutions before resorting to foreclosure.
Instead of ignoring the calls and lenders and hoping they will go away, talk to your lender to see if they can work out another option with you.
Forbearance
Some lenders, for example, may offer forbearance. This is when lenders don’t take legal action right away. Instead, they give you some time to create a repayment plan that you can afford.
Repayment Plan
With a repayment plan, you agree to pay back the missed payments over a period of time. For example, if you missed a month of your mortgage payment, you may be able to pay that back the following year, with agreed-upon installments each month.
Refinance
Your lender may let you refinance your loan. One of the ways they could do this is to add the missing payments to the balance of your loans. From there, they would re-amortize the loan. This lets you keep your home but extends the loan.
Debt Forgiveness
Although it is rare, your home lender may offer debt forgiveness. This would typically be in the form of forgiving one or two payments on your mortgage. You should not necessarily expect this to be offered as it is rare.
Note Modification
In the case of adjustable mortgages, you may be able to get the lender to change your loan terms. This could include adjusting the interest rate.
Read Your Loan Documents
Whenever you are at risk of foreclosure, take the time to read your loan documents to see your options. This will also outline what actions the lender may take, including foreclosure.
Find Additional Funds
If you cannot make a mortgage payment and are at risk of foreclosure, take a careful look at your spending and assets. Start with your spending and see if there is anything you can immediately cut. Subscriptions and memberships are an easy place to start. If you have expensive jewelry, a second car, or another valuable asset, consider selling it.
Keep in mind that even if you can’t raise enough funds to make the payment via this method, that may be enough to convince your lender to give you another chance. If they see you are serious about making payments, they may offer you one of the options mentioned above.
- Remember, that once the auctions restart, we are expecting some HUGE numbers. You can prepare for the upcoming new wave of foreclosures, by attending one of our free webinars.