Your mortgage is one of your most important expenses. Not only is it likely to be one of the most expensive, but if you fail to pay in full and/or on time it could result in foreclosure.
Should you receive a foreclosure notice from your lender, it’s critical to take action to save your home from repossession.
Here’s the million dollar question: what’s the best way to save your home from foreclosure?
Fortunately, there are a variety of options to consider, all of which can get you back in good standing. Start here:
This isn’t the right choice for everyone, but it could be just what you need to get back on track. You can catch up on back payments and then use the refinance process to extend your term, which results in a lower monthly payment.
The only issue with refinancing is that it doesn’t work if your loan is under water. This means you owe more money on your mortgage than your home is worth.
2. Short sale
Even though you want to stay in your home, this is better than foreclosure.
A short sale happens when you sell your home for less than what you owe, with the lender writing off the remaining balance.
If you’re interested in a short sale, you must negotiate it with your lender. You can’t take this action on your own.
It’s a last resort, but one to consider nonetheless. When you apply for bankruptcy, the automatic stay forces all creditors to cease collection activity. You then have time to figure out how to best save your home from foreclosure.
If you’re interested in going down this path, learn more about the details of both Chapter 7 and Chapter 13 bankruptcy. And of course, consider both the pros and cons. There’s more to think about than avoiding foreclosure.
4. Loan Modification
Rather than hide from your lender and hope you can catch up on payments, contact them to discuss a loan modification. This is exactly what it sounds like. Your lender works with you to modify the terms and conditions of your loan, thus making it more affordable in the future.
A modification comes in many forms. For example, your lender may agree to tack on missed payments to the end of your loan. Or maybe they allow you to take several months off from making payments until your financial situation improves.
There are many ways to save your home from foreclosure, with refinancing your mortgage at the top of the list.
If you receive a foreclosure notice from your lender, don’t delay in taking action.
Have you ever faced foreclosure in the past? Were you able to save your home? Which strategy did you use?