How To Stop Foreclosure
Foreclosure is the process by which the bank repossesses your home because you have stopped making your monthly mortgage payments. When a foreclosure occurs the lender forces you to move out of your home then auctions it in an attempt to recover the amount of the mortgage. If your property is worth less than the amount of the loan, you may be required to pay what is called a deficiency judgment. Essentially the deficiency judgment is the difference between the worth of your home and the amount of the mortgage.
If you do not want to lose your home along with the equity you have put into it, you should take steps to stop the foreclosure as soon as possible. The absolute last thing you should do in a foreclosure situation is avoid letters from your lender. Ignoring these letters does not make the mortgage or your non-payment go away, it only postpones the inevitable. If you wait too long, a police officer will show up at your door to escort you out of your home.
First try to work with the lender. You’d be surprised at many lenders are willing to listen to your financial problems and help you work out a solution. The lender doesn’t want to go through the foreclosure process anymore than you do because they will end up losing out on thousands of dollars in interest payments. Be upfront and truthful about your situation and let your lender know when you will be financially stable again.
Your lender may offer some modified repayment plans to assist you through your financial difficulty. This modified repayment may come in the form of forbearance, resulting in a reduced or suspended payment for a specified period of time. If you make such an agreement with your lender make sure you get it in writing.
Refinancing your mortgage or extending the term of the loan will reduce your payments to a level that is more affordable. Should you seek this option use a mortgage broker to help you. Keep in mind that there is often a fee associated with refinancing. The fee is a small price to pay for the ability to keep your home.
Selling your home is an option to avoid foreclosure. In the event that this option becomes a reality, you will need to choose a realtor who can put your house on the market as soon as possible to avoid your home being foreclosed before you have a chance to sell it.
If all else fails and you have no other choice you can do a debt-in-lieu of foreclosure. Through this process you voluntarily give your home back to the lender. While you still lose your home, your credit is not negatively affected as it would be through a foreclosure