7 Ways To Avoid Foreclosure And Keep Your Home
The fear of foreclosure. If you’ve ever been in this possible situation, you understand why there is fear. Having your home seized legally and then sold right before your eyes can be devastating. If you fear you might soon have to face this predicament, fear not! There is hope for you. Here are 7 ways how to avoid foreclosure and keep your beloved home.
1. Have Your Loan Reinstated
State laws are in place to help you, so be smart and take advantage of them. These laws give you the right to, within a certain amount of days, pay back the missed payments, fees, expenses, and interest. If you were simply behind a rock and a hard place for a few months, but you are now able to pay back all the money owed on the loan, you can get that loan reinstated. If your state does not have laws in place, you should be able to speak to your loan officer or bank. Typically, there are protections built into your original loan agreement that may help you get your loan reinstated.
2. Refinance Your Loan
Depending on your credit rating, you might be able to refinance your loan to a lower percentage rate and start the whole process anew. If you think you might be headed into a foreclosure, see if you can get a brand new loan started, which will pay off your previous loan, including your late payments. If you are too far behind, though, and if the foreclosure process has already begun, you might not be able to take advantage of a refinance. Again, speak with your bank or lender or a financial professional who can guide you through the refinancing process.
3. Start A Repayment Program
This is one of the least painful ways to hold on to your property and current loan product. By working with your lender, you might be able to make continuing mortgage payments, then add an additional amount per month to pay off the previous missed payments.
Consider it to be like an additional loan payment or credit card payment.
Say your mortgage is $2000 per month and you’ve missed three payments, totaling $6000. You would simply pay your $2000 mortgage along with an extra $500 per month toward the $6000 in missed payments. If you can swing these amounts, you could be caught up in one year.
4. Enter Into A Forbearance Agreement
Wouldn’t it be nice to not have any kind of mortgage payment for anywhere from 3 to 6 months? If you are heading for a foreclosure, your loan company might be willing to work with you in this way. It’s called a forbearance where you make no mortgage payment for a set amount of time. See, if you’ve generally been a good borrower but only recently came upon hard times, the lender would rather not lose you. They know that having a person make 30 years worth of payments on a home is very valuable–and better than going through the legal hoops a foreclosure takes. So, by deferring your payments for a while to help you catch up looks attractive to them, and to you.
5. Get Help From The Government
You should consider some of the programs offered by HUD, which is the federal government’s Housing and Urban Development department. These programs take your home value and contrast it to what you own on your loan, and many times, they can help you find a solution to your situation.
6. Become A Rental Property
Here’s an out of the box solution: Rent your home. If you can set the rent to be at or slightly above your current mortgage payment, you’ll basically have someone else paying your mortgage. Of course, you’ll need somewhere else to live over the course of the renter lease and until you can afford to make the payments yourself again.
7. Last Resort: Sell Your Home
The good news is, your bank really doesn’t want to own your home. They would rather help you out with a short sale, which could take care of the remaining balance and any back payments you owe. And let’s face it, it would be better to sell, make some profit if you have equity. and move on instead of losing everything.
Regardless of the solution you choose to take advantage of, any one would be better than losing your house to a foreclosure. Many people view their home as an investment, therefore, losing that entire investment without any kind of profit just isn’t the decision. With these 7 ways to avoid foreclosure, you can rest assured that your house can still be your home or a profitable investment.