Many homeowners experience unexpected hardships that change their ability to pay their mortgage as scheduled. Hardships are often the result of a job loss, medical expenses, or the re-setting of the interest rate of an adjustable rate mortgage. No matter what the cause of your troubles, ignoring the problem won’t help. In fact, it will only make matters worse. You need to find a way to stop foreclosure of your home.
The homeowner in the difficult position of not being able to make their payments timely will eventually run out of time. If this describes you, you need to find a solution. Please do not wait for the day when circumstances improve or convince yourself falsely that foreclosure can’t happen to you.
Here are some options that may lead you to a solution to stop foreclosure of your home.
1) Make a budget and see if you can cut and save. Yes, this is obvious but many people avoid this step. They should not because if they decide to ask for any assistance or help, your budget is going to be scrutinized. With that budget comes all potential sources of income. Income is cash coming into the home from all of the residents. Are there family members that could contribute more by getting a job? Do you enjoy certain luxuries that could easily be cut or eliminated? Are there assets (extra cars, boats, electronics) that could be sold for cash? These decisions may be difficult but an important first step in finding a solution. You are not going to get help from other parties until they are convinced you have left no stone unturned. Many people consider their retirement savings as a possible source. This is one exception. Tax penalties for early withdrawal usually are so prohibitive that lenders and other solution finders will not force you to turn to that option.
2) Contact Your Mortgage Company – After you have taken every possible step above to increase cash flow in your personal budget, and there still is not enough to make your mortgage payments, you must contact your mortgage company and discuss your hardship. Don’t delay or hide from your lender-that will only decrease the chances of receiving any help. When you call your mortgage company you are asking for help to find any options or alternatives that may stop any foreclosure proceedings from starting or proceeding.
3) Review Your Options – After contacting your lender, or in some cases the servicing company that handles the loan for the investor, you may have other options available to you. Typically lenders are not required to make adjustments to your loan, but many may consider it a viable option if you present your circumstances correctly.
Possible Options include:
Short Sale – Short sales use to be considered the least likely of all solutions. Lenders just made it too hard to have one completed. Times have changed. With the help of an experienced short sale expert, you can sell your home for what the market will bear…even if it is less than your mortgage balance! Hence that is why they are called “short sales”. Lenders have learned that short sales with a cooperative seller provide the best outcome compared to all other options. Short sales are usually the most favorable outcome for a troubled homeowner as the sale relieves the owner of debt and damages their credit less than any other option.
Deed In Lieu of Foreclosure – Deed In Lieu (DIL) is where the lender just lets the borrower/homeowner sign the deed for the home back to the lender. Some people describe the process as “turning in the keys.” This phrase trivializes the process and should not be the approach taken. A trained professional working with the homeowner can work with the lender to minimize any future claims and negative reporting on the owner’s credit.
Re-amortizing – Unless you have greatly cleaned up your budget as described below, this is the least likely option. A re-amortization must be supported strongly by the changes you have made to your circumstances. One possible scenario where a re-amortization might work is when one borrower has found a new or higher paying job. If enough time has passed to have moved beyond any trial employment periods, the new income might be a source of a plan where payments or the term of the mortgage are increased to clean up the deficit balances and related charges owed. If you think you may qualify for a re-amortization, discuss with the lender a specific, reasonable, proposal. The changes made must be tangible and significant.
To stop foreclosure of your home, you can’t ignore the issue. Find somebody with experience, who you can trust, to assist you to discover your best option.
