Steps to Take to Avoid Foreclosure

Steps to Take to Avoid Foreclosure

When you are getting a mortgage for your home, you obviously don’t start with the intention of foreclosing. You want to pay the loan until the end so that the house remains in your possession.

However, many things can happen along the way. You can end up without a job, your promotion can be denied – or you simply have a great expense in your family that causes you to fall behind on your payments.

Needless to say, if you take action as soon as possible, you can avoid foreclosure. You just have to follow these steps.

  1. Gather Your Documents

If you feel foreclosure sniffing from around the corner, you need to gather your documents and set up a case file. Organize in there every document that you believe is important for your mortgage situation. And take some time to actually read those documents before you go forward.

  1. Organize Your Income

To pay back this sort of debt, you first have to figure out exactly how much money you have – and how much you can rely on your income. Think about where your expenses go and try to figure out whether you can afford the monthly taxes without doing any changes or not. You might want to review your budget – and if the response is negative, you have to look into foreclosure alternatives.

  1. Know The Options

Whether it is temporary or permanent, there are several options that you can go for. You can go for loan modifications, refinancing, or forbearance agreements. The first two are permanent moves, so you might want to think them through before you act. The last one is not permanent – and it depends on whether the lender agrees to offer you an extension to the payment for a certain period of time or not.

  1. Call Your Mortgage Servicer

The lender obviously does not want you to foreclose – because they will also lose money in this. If you keep paying, they get the money for the house and the interest. On the other hand, if they are forced to foreclose and give up on your home, then this means they will no longer get their interest. If you tell them about your problem ahead of time, the chances are that they might come up with a solution to help you out.

  1. Sell Your Home

This might be the opposite of what you are trying to do, but selling your home to avoid foreclosure might at least ensure that you’re not buried in debt after that. If you have equity in your house, use it so that you can sell it – and then use the remaining proceeds to pay for the rest of your mortgage. You may or may not have enough money for a new deposit – but at least you will be debt-free.

Final Thoughts

Foreclosure is indeed scary – but if you tackle it at the right moment, then your chances of losing your home or getting buried in debt will also decrease. Talk with your financial advisor and see what your options are.

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