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To prevent your house from going into foreclosure, you need to take action if you’re in financial distress and at risk of or have already fallen behind on your mortgage payments. Your lender may cooperate with you to help you stay in the home since they don’t really want it.
You need to organize yourself, take action immediately, comprehend the foreclosure procedure, and be aware of the options. You’ll have a higher probability of keeping your house if you do these actions. Before it’s too late, use these five steps to prevent foreclosure.
Negotiate a New Mortgage Repayment Plan
Suppose you recently overcame a brief setback that kept you from paying your monthly repayments for a while and are now capable of doing so every month but cannot start repaying the missing payments in full. In that case, this is a viable alternative for you.
If you don’t have any problem making payments in the future, your lender could agree to figure out a repayment schedule to bring your past-due mortgage back on track. As part of a repayment plan, your lender will add portions of the sum you owe for late payments to your normal monthly installments, enabling you to settle the debt over a predetermined period.
When negotiating a new payment schedule with your lender, be completely honest about how much you can afford to pay every month. Avoid committing to paying more than you can comfortably afford.
Apply for a Mortgage Forbearance
Forbearance enables borrowers to suspend monthly mortgage repayments for a certain time if they are momentarily having financial difficulties.
The lender anticipates that you will utilize the forbearance period to get on your feet again and get ready to resume making your normal monthly payments at the conclusion of the predetermined period, in addition to paying back any accrued debt during the forbearance period.
However, you should know that you’ll be obligated to repay the deferred amount at the grace period’s conclusion. Therefore, if you apply for a five-month forbearance period, you will be required to make up the five months’ worth of missed mortgage payments. Usually, you may do this as a one-time payment or as a part of a payback schedule.
Request a Loan Modification
Lenders can permanently change the terms of a loan to assist you in bringing it current. This usually involves stretching the amortization timeline, decreasing the interest rate, rolling the overdue amount into the mortgage, and re-amortizing the new balance. If you’re not eligible for refinancing, a loan modification may be able to help you keep up with your payments and keep living in your house by lowering your monthly payments.
Make a Short Sale
If there are no options for a payment arrangement that would let you keep your property, your only remaining options to prevent foreclosure include moving out. One of these choices is something called a short sale.
You sell your property in a short sale for less than the amount you owe on it. Your lender receives the selling proceeds and usually forgives all or a portion of the outstanding debt. Before exploring this option, your lender must consent since they must agree to take less than what is due on your mortgage.
Get Expert Help
if your lender files foreclosure proceedings against you, find a legal company specializing in foreclosure to assist you in analyzing your debt and making an educated decision in the complicated world of foreclosure law. Foreclosure defense attorneys may assist you in renewing the mortgage or, if it’s too late, assist you in filing for bankruptcy.
Bankruptcy under Chapters 7 and 13 can permanently or momentarily halt a foreclosure. In both cases, the court imposes an automatic halt to the foreclosure process. This lasts till the bankruptcy is resolved. Both types of bankruptcy do not dismiss a mortgage. You will still need to make payments even if bankruptcy stops the foreclosure.
You won’t risk going into foreclosure if you miss a few days of a house payment. However, if you haven’t made a payment by the expiry of the grace period, your lender has issued you past-due notifications, or you’re several repayments behind, you have to take action right away to get your home loan back on track and prevent foreclosure proceedings.
By Maggie Bloom
– graduated from Utah Valley University with a degree in communication and writing. In her spare time, she loves to dance, read, and bake. She also enjoys traveling and scouting out new brunch locations.
Member since November, 2021
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