Hello, everyone. Today’s topic is an interesting. If you’re renting an apartment or a house, you won’t have to worry about the possibility of this happening to you anytime soon. If you own your house, hopefully, you have the funds to pay the mortgage each month continuously. If you are having problems paying your mortgage, you may get to a point where you eventually have to face foreclosure. If foreclosure is looming on the horizon, now is the time to kick it into gear. Just because you’ve had trouble making payments doesn’t mean you have to lose your home. There’s an excellent chance you can avoid foreclosure. There are three things you can try before accepting foreclosure.
Re-Amortization or repayment plans
If you still have a good source of income but have just fallen behind on your payments, a re-amortization plan or repayment plan can help. Their plans are predicated on you being able to make all your payments in the future. That means that the loan as a whole works for you, but you just couldn’t pay temporarily due to financial hardship. The way it works is your lender basically, wraps all your overdue payments into your old loan, then re-amortizes (redistributes) those accounts over the course of the loan. Once you’re past due payments are re-amortized, you can continue making your payments as normal.
Another similar option is a repayment plan. Instead of re-amortizing your back payments, you and your lender could just work on a repayment plan of some sort. This will be a little tougher for you because the back payments will be distributed over a shorter time, say three years instead of 20 years. It is easier to sell the lender on that than re-amortization.
The next thing that you should look into is a loan modification. What if you just can’t afford your loan in its current condition at all? Your lender may still be willing to work with you. In this case, you will need to rework your loan from the ground up entirely. Different monthly payments, different length or the loan, possible a different interest rate and payment terms. A loan modification goal is to take your existing loan and transform it into something that makes more sense for your financial situation. There are several companies that you can choose from. Lending Tree, Quicken Loans, and Greenlight Loans are three of them that you can choose from.
Short sale, deed in lieu
Finally, if you really can’t continue to afford your home, you can still avoid foreclosure by working with your bank in an amicable way. One way to do this is to help them find a buyer. If you can find a buyer for the home, the bank may be willing to accept the buyers bid and forgive any additional amount you’d owe the bank. This is called a short sale. With short sales, the price is usually set by the agent, and the seller, not the bank Lowball offers get slow or no response.
Another option is to do a “deed in lieu.” This is where you just give the bank the house. In exchange, the bank releases you from the mortgage. This helps the bank avoid the trouble of having to actually foreclose on the house. Both a short sale and a deed in lieu will have a severely adverse impact on your credit.