Avoid or stop foreclosure now
Do you feel like you've lost control?
Sometimes life takes an unexpected turn and we find ourselves in difficult situations. Losing our jobs, health, marriage or anything which affects us financially, is not something we wish upon anyone-- especially ourselves.
If you are currently at risk of losing your house and having the banks damage your credit, then you need to act fast to prevent that from happening. You need to take back control and stop the creditors and lenders from dictating how you should manage your finances and time.
Do you know what your options are?
Once you know that you will be missing a mortgage payment the first thing you should do is to contact your lender and explain your situation. A lot of these troubles can be avoided by making a simple phone call to the lender to work something out. You have to be aware that the banks are not in business to take people's houses and to give you grief.
But the truth is, some owners do try to delay the inevitable, hoping that it will just magically dissappear, only to find themselves deeper in debt and facing foreclosure.
When you find yourself in this situation, you must act quickly. During this time you have several options:
Reinstate the loan - Pay what you owe the bank. Borrow money from friends, neighbors, relatives and whoever under the sun to pay the arrearage, which includes: the missed monthly payments, late fees, NSF fees, foreclosure fees, and whatever else the bank needs to recoup for filing the foreclosure. Ideally, you would like to do this even before the banks begin foreclosure proceedings.
Ask the lender for a forbearance agreement - This is an installment plan to bring your account current. Basically, your total arrears (what you owe the bank) is divided into x number of months. Then each month, in addition to your regular monthly payments, you pay that extra amount (divided earlier) that goes towards the arrears. Simple example: you owe $1000.00 to the bank and your regular monthly payments are $500. In a 10 month forbearance agreement (means you get 10 months to pay back what you owe), the $1000 is divided by 10 months which equals to $100 extra you have to pay per month for 10 months. So now, your payments per month would be $500 plus the extra $100 for a total of $600 to bring the loan current within 10 months.
Refinance - Nowadays with borrowed money being so cheap you can refinance your property. You get to roll over all of what you owe from one loan into a new loan. Typical in refinancing, points and closing costs will be involved that can run you between 1 to 2% of the total amount for costs and 0 to 5% for points.
Ask the lender for a loan modification - This is similar to refinancing but without the costs and searches involved in getting a new loan. You'll have the same loan, same lender but with modified terms, hence, loan modification. It's possible to modify the loan to whatever is necessary to help your situation if both you and your lender can agree to the new terms.
File for a Chapter 13 or a Chapter 7 bankruptcy - Your credit immediately takes a hit. This is really just a short term solution to forestall the foreclosure proceedings. A bankruptcy is no guarantee that you'll be able to keep your house and it actually deepens the debt you're facing because additional bankruptcy fees are being tacked on to your loan. With filing a bankruptcy you have just damaged your credit and still run the risk of losing your house. Consult a bankruptcy attorney if you choose to pursue this option.
Give the house back aka Deed in Lieu of Foreclosure. - You basically give the house back to your lender. Your credit still takes a hit but not as much as a foreclosure or a bankruptcy. This may not be possible if there are other liens attached to the property. Also, the lender may actually have you put the property on the market for a specified amount of time before agreeing to take anything back.
Sell the house - If you have tried and exhausted all your options sometimes it is better to just cut your losses early. You will still have a mark on your credit as missing your payments but it is better than the alternative of having a foreclosure sale or a bankruptcy filing recorded. Take the time to get yourself together and regroup. There are more important things to worry about than debt and liabilities.
Don't forget that the most important part in this whole process is to maintain an open line of communication with your lender. Always keep in touch and let them know if anything changes. Who knows, the banks may actually surprise you.
If you have any questions or comments, feel free to contact us at: help@sellitasis.com
Other useful foreclosure resources
HUD's how to avoid foreclosure
HUD Help for Homeowners Facing the Loss of Their Home
Bankrate's Credit Management: Falling behind? Tell your mortgage servicer
Bankrate's Avoiding foreclosure