How to stop foreclosure?
Are you struggling with your mortgage payments or anticipate that a missed mortgage payment seems likely in a near future? It can be very trying to be constantly worried about facing foreclosure. It is a legal process where the lender or the mortgage company can repossess your home in case you miss your mortgage payments. But there are possible options where you can actually avoid foreclosure.
Knowing how to stop these legal proceedings will definitely keep you in a good stead, helping you stay in your house, saving your property from leaving your hands and maintaining a good credit score. Here are a few possible options that can help you avoid foreclosure and keep your home:
1. Contact your lender right away: Do not ignore the communication from your lenders in case there are some challenges with the loan payments. In fact secure a meeting with them and explain your situation very clearly by presenting all the correct facts regarding your financial information. Staying on top of it will only help you.
2. Home Affordable Modification Program (HAMP): This government initiative enables you to modify the original terms of your mortgage such as change in the interest rates, monthly payment amount and the duration you have to pay off the loan. It makes your payments more affordable. Usually HAMP modification can get you a 40 percent drop in a monthly mortgage payment. You are eligible if you have recently recovered from a financial problem and can prove that you are able to afford the modified loan amount.
3. Special Forbearance: This process helps you achieve a temporary reduction or suspension of your payments for a certain specified period. You may qualify for special forbearance if your income has recently reduced. How it helps you? It gives you some time to improve your financial state. You are offered a payment plan where you can pay back the missed mortgage payments gradually until you are at a better place. For people who are unemployed but seeking employment actively are eligible for an extended forbearance period. However, you must note that you must eventually pay the full amount. It is only that you are agreeing to either pay one lump sum amount to catch up on your pending mortgage or make extra little payments with your monthly mortgage payments.
4. Partial Claim: Here you may work it out with lender (Mortgage Company) to receive a one-time payment from your FHA-Insurance fund. This will be the amount necessary to bring the delinquent loan current. It must be retreated that you will be only eligible for this second loan if you have FHA insurance, your loan is at least 4 months delinquent but no more than 12 months delinquent and of you can establish that you will be able to start making your full loan payments. This loan is interest free and you will not be required to repay this until you pay off your first mortgage or when you sell your property.
Sometimes, the most important thing is to just avoid foreclosure even if that means you have to leave your home. Here are a few possible options that can help you avoid foreclosure where you can’t keep your home:
1. Short sale or Pre-foreclosure sale: This step will help you avoid foreclosure by selling your house for an amount that is less than what you need to pay off your mortgage loan. Though it is damaging for your credit score, it is still a better proposition than facing a foreclosure. How it helps you? It immediately eliminate or reduces the remaining payment and you may even be eligible to receive relocation incentives. Read our article 3 Common Buyer Mistakes in a Short Sale to avoid slipups when opting for short sale.
2. Mortgage Release (Deed in Lieu): If you have tried all other possible options such as Home Affordable Modification Program, partial claims, forbearance and short sale but nothing seems to be working in your favour, Mortgage Release is the last option. It allows you to voluntarily transfer the possession of your property to your mortgage owner in lieu of getting freed up from your mortgage loan and payments. Mortgage Release offers struggling homeowners with flexible options to leave the property on their own terms. You can either leave immediately, stay in the house for up to 3 months without paying the rent or opt to lease the house for up to one year at fair market rates. If you leave the property undamaged, you may even be eligible for a relocation assistance.
Be careful that you are always honest with your mortgage owner/lender about your financial situation. Be aware of the scams. If the options sound too good to be true, it is usually a scam. Explore every possible option that might help you avoid foreclosure and most importantly don’t delay. Time is of great essence here so act now.