The time homeowner is facing financial issues; dreadful consequences can enter into the picture. This is very true when it comes for the foreclosure of your house that was used to secure the debt owed to the lender who is now foreclosing to get title to the property back.
There are number of procedure that homeowner in financial pain can rely on to prevent themselves from foreclosure. Some of these methods involve money while others need agreement to relinquish money by the lender or through the court system.
Preventing Foreclosure of Home Loan
- Reach out the Lender and Explain Your Situation:
Contact your lender as soon as possible if you think you will be at a risk of missing a monthly payment resulting in the risk of foreclosure.
This is the right time for you to ask your lender to take necessary action so that the foreclosure can be stopped before any final action. When you go to your lender, he will initiate the discussion process between both the parties before foreclosure becomes the only option.
- Take a look at Workout Options:
A number of options are available once you decided to go with the lender or servicer- the company that services the loan for an investor. The options are as follow:
1. Ask for Forbearance:
Forbearance is another temporary but effective way to prevent foreclosure. It allows you either pay the amount partially or no payments for a specified time specified time agreed between you and the lender. In this process, you need to pay the full amount forbore. You can pay one lump sum amount or pay some extra payment to catch on the delay. This includes right to skip a payment or make smaller payments for specific time agreed between you and lender.
Suppose you were unable to make payments for 3 or more months. Under reinstatement, also known as “temporary indulgence”, you can pay the missed payments along with the current one with some late fees and other costs. Next payments will continue the same way and the loan continues as before.
3. Consider Consulting a Financial Advisor:
If you are not able to fix a solution with your lender, it’s better to opt for a financial advisor. A financial advisor will help you to get your finance back on track and act as a mediator between you and your lender and comes up with some solution to avoid foreclosure. It’s better to hire a good and reputed financial advisor and invest money on him especially if they help you hold onto your home
- Refinance the Loan:
There are many changes made since 2001 in the loan plans. These new formats have been issued which allows with low monthly payment in the initial stages and raise the payment later.
If you have a loan where soaring payments are a certainty, don’t wait to refinance. Do it now while you have a strong credit profile and no missed payments.
- Sell the Property:
There are certain cases where applying all the above plans is of no use which helps in saving the property. In such cases selling the property is the only option left. If a job is lost, medical payments are overwhelming, or mortgage payments are raising to the point of bankruptcy the only plausible choice may be to sell the property.
If you are facing the worst time and you have to protect your interest and thinking to sell the property, do it in a decent time before foreclosure. As before foreclosure you will get a better price for the property and preserve your credit standing.