Plenty of people are having financial difficulties now and think that giving up their home and accepting a foreclosure is the easiest way out. I hear people say all the time, I don’t care about my credit, my house is being foreclosed on, and I’m just going to let it go. They say this without even exploring the options or thinking about the future consequences.
For example the other day I ran into a friend of mine and he said that his wife just lost her job and that they wouldn’t have enough to pay there mortgage payment so they were going to just go into foreclosure. This is what was decided before they even missed a payment or talked to their lender. They had been trying to sell there home for six months, no one had made an offer and they just decided that it was a lost cause and that was that. Below are the suggestions I made to him to avoid the foreclosure, hopefully before it even begins. I think a lot of people are in this circumstance and can benefit from reading the suggestions and options, before just giving up.
You should go to your lender and tell them about your problems and hardship, and the sooner the better. They may have a solution for you or can help out, until you can improve your financial situation. There are many options you should explore before accepting a foreclosure. Talk to your lender about a loan modification or a repayment plan.
If you have had your home for a while and there is any equity in it, you can apply for a home equity loan. A home equity loan, will allow you to borrow money by leveraging the equity in your home. Most home equity loans will let you borrow up to $100,000.00, which you can use to get caught up on your payments and pay off as much of your first mortgage as possible. This option is usually available to you if you have lived in your home for several years and made enough of your mortgage payments to have equity built up. Your credit may need to be decent, so this is an option to take advantage of early on before you miss mortgage payments and negatively affect your credit.
If you have already tried to sell your home through conventional methods, it may be time to think about a short sale. This is where the lender will accept a payoff for less than what is owed on the loan. The lender will usually approve a short sale when a home has decreased in value and more money is owed than the home is worth. Many times a lender will approve a short sale regardless of the value of the home, because they are willing to accept a certain amount of loss in a foreclosure situation.
Finally, even a deed in lieu of foreclosure is something you should look into before just giving up. A deed in lieu is where you give up the deed for your home to the lender, so they will stop the foreclosure proceedings. This is usually a last resort after you have tried some of the alternative methods. Deed in lieu will still affect your credit, but not as bad as a foreclosure will.
Talk to people in the foreclosure industry and see what they have to say. Even though your credit is shot, you can build it back up with a couple of years of managing you money and paying bills on time. If you have foreclosure on your record it can be up to 7 years before you will be approved for another home loan.
Latest posts by ljspahr (see all)
- Steps Involved In Getting A New Mortgage - December 29, 2009
- Today I Was Forced To Serve A Five Day Eviction Notice - November 5, 2009
- The Paper Trail You Need to Follow to Defend Foreclosure - September 24, 2009