Tips to Avoid Foreclosure
How can I avoid foreclosure?
No one plans on losing their home when they sign their mortgage papers. However
circumstances change and any number of things can happen that could leave you facing
foreclosure. Medical bills may pile up, divorce, loss of a job or death of a spouse
can all lead to financially difficult circumstances.
As soon as you begin experiencing financial difficulty you should contact
your lender. Contacting your lender before your mortgage is in trouble could
mean the difference between keeping or losing your home. The sooner the lender
knows you are struggling, the more they can help you.
Lenders do not like foreclosing on homes. They would rather have your mortgage
payment and the interest that accrues over the life of your loan. So if you’re
experiencing short-term financial problems, such as a medical emergency, your
lender may work with you.
Options the lender may offer.
- Change mortgage terms.Your mortgage terms could be modified. This
usually includes lengthening your amortization schedule, lowering of the
interest rate or adding the missed payment into the principal balance and
re-amortizing the new balance. This will bring your mortgage current.
- Short sales or refinances.In this situation the lender allows you to
sell the house for less than you owe, takes the proceeds and calls it even.
A short refinance is when you are forgiven of a portion of your debt and the
rest is refinanced into a new mortgage.
- Getting more time. . Some lenders might consider a refinance with an
additional loan that has high interest rates and steep fees. But it buys you time
to sell your home and avoid foreclosure.
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