If you’ve fallen behind on your mortgage payments due, to a situation like losing your job or going through a divorce and you’re at risk of foreclosure know that many others are in the boat. Since the housing market crash countless homeowners have faced the loss of their homes to foreclosure. The silver lining is that there are steps you can take to prevent a foreclosure. The first thing to do if you’re struggling with your mortgage is to reach out to your lender.
By communicating with them you open up the possibility of devising a plan, which could involve one of these four methods that might help halt a foreclosure;
Seeking a Loan Modification
Both federal and state laws prevent lenders from moving with foreclosures while they review a loan modification request. Loan modifications involve the lender agreeing to change the terms of your loan. Such as reducing payments adjusting rates altering loan amounts or combining these factors. In order to make it easier for you to manage.
The Making Home Affordable (MHA) Program is a government effort that provides loan modification options to assist homeowners in avoiding foreclosure. There are MHA programs tailored for loan modifications that can aid in reducing your mortgage expenses or finding an alternative solution for your mortgage burden.
Financial hardship plays a role, in decisions regarding loan modifications.
Applying for a loan modification is quite similar, to a loan application. It involves gathering and providing documents to explain the reasons behind your difficulties how long they are expected to last your current income and potential future earnings.
Considering Bankruptcy
Deciding to file for bankruptcy is a step that can prevent foreclosure. Once bankruptcy is filed foreclosure proceedings are halted. The lender can request permission from the bankruptcy court to proceed with foreclosure. This process typically takes one to two months.
Types of Bankruptcy;
Chapter 7 allows you to discharge your debts if you meet the eligibility criteria.
Chapter 13 involves restructuring your debt and establishing a payment plan. Opting for Chapter 13 might allow you to retain ownership of your home by including the mortgage in the repayment plan.
Exploring Short Sale
If you anticipate term challenges and realize that keeping your home may not be feasible pursuing a short sale, with your lender could be an option instead of waiting for foreclosure. However this option applies to homeowners whose outstanding mortgage exceeds the value of their property.Your mortgage lender needs to give the light for the sale before you can put your house on the market. They must agree to accept an amount, than what’s owed on the loan once the property is sold.
The approved reasons for a short sale are demonstrating that a decrease, in income has made it impossible to afford your home or showing that you are required to move for work purposes.
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