The main key to stopping foreclosure is all about timing and not delaying or ignoring the problem. There are dozens of ways to stop foreclosure, it’s all about what stage you are with the process and which option will work best for your situation. If you are about to or have missed a mortgage payment, get on the ball and start looking for ways to avoid foreclosure. This article will go over different workout plans through your lender to see which one may work best for you.
Modify the existing mortgage. A loan modification is one of the first things you should try and workout with your lender. This is where they agree to change the terms of your loan, reducing the interest rate, principal portions of payment, or possibly extend the loan in an effort to reduce the overall payment obligation. This is usually a temporary arrangement they will do for you, and working with a professional foreclosure negotiator can help your chances of getting a loan modification.
Repayment plan. This is where you will restructure your payment plan and take your past due amounts and tab it onto the payment due the following months. Usually, you will try and get everything paid up within six months. With proof of income and proper down payment, most lenders will accept this plan.
Deed in lieu of foreclosure. This is where you will basically give back to the lender the deed to your home, in exchange for their forgiveness of your mortgage. This is usually a last resort and one that most lenders do not like to accept.
Short Sale. This is where you will ask you lender if you can sell your home to a third party for less than it is worth. The lender will agree to accept this amount as the full settlement of the debt.
Chapter 13 Bankruptcy. Filing for bankruptcy can stop or put a hold on the foreclosure. Either avoiding it all together or giving you more time to find a solution. In Chapter 13 plan, you have the best chance of saving your home, this is where you will come up with a plan to repay your debts with little to no interest of the next 3 to 5 years.
Full pay off refinance. This is where you will borrow money on a new mortgage or equity in your home to pay off the old mortgage. If you have enough equity in the house, bad credit will not stop you from getting a new loan.
Hopefully some of these options will give you ideas on ways to stop your foreclosure. Getting people to work on your side and help you negotiate some of these options is highly advisable, because every state and lender has its own rules and regulations. Thus, you want to make sure everything is working out in an affordable manner for you. Keep in mind the sooner you work on these options, the better your chance will be of getting one to work for you. You need to work with your lender as soon as possible, so you will have more options to choose from. If it is early on you can choose the one that will work best for you.
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