Today’s housing market can be difficult for homeowners in danger of defaulting on mortgages. The foreclosure process can be incredibly quick. In some states, if you miss just one payment without taking action, you may find yourself homeless in less than a month. If you’re concerned that you may default on your mortgage, never fear: there are ways you can stop foreclosure. Although it can be challenging, you do have several options to keep your home from being foreclosed on.
Some possibilities for avoiding the threat of foreclosure include:
- Get a housing counselor. Loan counselors are professionals who will work with you to find options to stop foreclosure. Because they are familiar with the industry, they’ll be able to point you towards the right solution for you.
- Forbearance. Lenders may sometimes agree to give you time before taking legal action against you. This gives you time to figure out how to repay your mortgage.
- Refinance. You may be able to reamoritize your loan by adding your back payments to your loan balance. However, you’ll need to be back in a stable financial position, since this will probably increase your monthly payments.
- Note modification. You may be able to work with your lender to get a more favorable interest rate or more time to pay back your loan in the long run.
No matter which option you choose, make sure it works for you financially. Almost a third of all foreclosure modifications offered by lenders can actually increase monthly payments.
If you’re already facing foreclosure and none of the above options work for you, you still have a chance. Consider the following options to stop foreclosure:
- Selling your home. To avoid a foreclosure, one option is to sell your home. Work with a good real estate agent to ensure that you’ll get the best value for your property. Make sure your real estate agent can work with you very quickly to sell your home so that you can sell it before it’s foreclosed on.
- Short sale. If your home is worth less than you owe, you may be able to consider a short sale. However, you’ll have to work with your lender to make sure they’re amenable to the sale.
- Deed the home back to the lender. Although this affects your credit the same as a foreclosure, it prevents the negative consequences. In this scenario, you would deed your home to the lender, and in return, they forgive the mortgage.
Defaulting on a mortgage is a scary prospect. Luckily, you still have a chance to stop foreclosure. No matter what your situation, make sure you contact your lender if you believe you’re going to have an issue making payments. If you wait too long, it may be too late.
