5 Tips to preventing foreclosure
There are many reasons that could make one default in the repayment of their mortgage. This could result in the process of a foreclosure, where their house or property will be repossessed. This is a process that one may never want. If you have lost your job or you have spent your mortgage repayment money on other needs, it is possible that you will default on the monthly repayments. As such, you could be in for a foreclosure. What are some of the things you can do to help you in Foreclosure prevention? There must be a way that this process can be stopped so that one is probably given more time to work on their repayments.
Here are 5 tips to preventing foreclosure:
- Enter into negotiations with your lender
This is one of the most practical ways that you can avoid the process of foreclosure. Your lender is always willing to listen to your side of the story so that they can make an informed decision. When your lender is contacted, they can probably agree to the issue of restructuring the debt so that it can be staggered in easy repayment installments. The homeowners have a chance to explain their hardships to the lender. The lender can then make a decision based on what the homeowner is ready to contribute to their mortgage repayments.
- Filing for bankruptcy
If you do not have the means to make repayments for your mortgage, it is possible for you to file for bankruptcy. This means that the government can prevent your creditors from coming after you. However, this does not mean that the debt will be written off. You will still have to make a repayment at a later date. With bankruptcy, you have some time to get back on your feet and start repaying the debt.
- Relief programs
The government implements some programs that can help specific homeowners to prevent foreclosure. There is the Making Homes Affordable Program. For the unemployed, there is the Home Affordable Unemployment Program that helps people who are unemployed to avoid the foreclosure of their homes. The FHA Special Forbearance program can help you to with your debt management for up to 12 months.
- Refinancing through a loan
You can discuss with your debtor for a second loan as a refinancing of the first loan. Here, you take a loan to repay the first one. You see, it is possible that the unpaid balance is much smaller and therefore, the second loan can repay the first one and you can afford to make the lesser repayments resulting from the second loan. However, you need to seek this option before the process of foreclosure begins.
- Short selling
You can short sell your home at a higher price than the debts. When you do this, you can then clear the debt and clear yourself from the contract. This can be done in the middle of the foreclosure process. The good thing with short selling is that your debtor will not report you to the credit monitoring agencies. This means that you will retain your reputation and a good credit score.