Financial difficulties can strike homeowners at any time. However, there may be alternative options available to you if you can’t make your mortgage payments and are contemplating foreclosure. Read on to discover different ways to avoid foreclosure on your home.
Know When You’re in Trouble
The earlier you address your financial problems, the greater your chances of avoiding foreclosure. As soon as you notice you’ll be having problems making payments, contact your lenders so they can discuss alternatives with you. If you get mail from your lender, be sure you review it right away to learn about foreclosure prevention options and any notices of imminent legal action.
Look Into Refinancing Options
While refinancing isn’t an option once you’ve entered the foreclosure process, if you see the warning signals early enough, you might be able to refinance your mortgage and decrease your monthly payments. You should talk to your lender before you miss your first payment, as this gives you the best chance for approval. Before they write out a new loan, you’ll usually have to demonstrate proof of a financial crisis affecting your ability to make payments on your current loan.
Schedule an Appointment With a HUD-Approved Counselor
HUD, the United States Department of Housing and Urban Development, offers free or low-cost housing counseling around the country. If you need it, housing counselors can help you understand the law and your options, arrange your finances, and represent you in lender discussions.
Consider a Short Sale
Once you exhaust all other alternatives, you should consider a short sale of your property rather than a straightforward foreclosure. To begin a short sale, you must first get your lender to agree to those conditions. However, completing the process will have a reduced impact on your credit and your ability to buy a home in the future compared to a foreclosure.
File Bankruptcy as a Last Resort
If your foreclosure sale is taking place within the next few days, filing for bankruptcy is the best option to stop it. After you file for bankruptcy, the court issues an automatic stay, which prevents the bank from foreclosing your property. You will postpone the foreclosure while the bank seeks court authorization to proceed, but you should only use this as a last resort.
If you and your family are concerned about your ability to make mortgage payments, implementing any of these different ways to avoid foreclosure on your home can be a tremendous financial and emotional relief. Know that there are options out there. Just remember that the sooner you start looking for these alternatives, the better.
