People who are facing losing their homes to a foreclosure are going through some very difficult times. Foreclosures have been linked to depression, divorces, mental health problems, insomnia, and sometimes even suicide. What can make going through a foreclosure even worse is when you don’t know your options.
Just because you have begun to fall behind on your mortgage payments doesn’t mean that you don’t have any alternatives available for saving your property. Believe it or not, you do have options, and no matter what situation you are in it is possible for you to minimize your losses and make the best of a bad situation.
This article tells you about 5 powerful alternatives you can take to avoid foreclosure on your property.
Sometimes lenders are willing to arrange a repayment plan based upon the financial situation of the borrower. They may even be willing to grant a temporary reduction or suspension of your payments. If you have recently experienced an increase in living expenses or a reduction in your income, you may be able to qualify for a special forbearance. You will, however, need to provide your lender with information that shows them you’ll be able to meet the obligations and requirements of the new payment plan.
Sometimes you’ll be able to refinance the debt and/or extend the term of your mortgage loan. This way you can catch up because your monthly payments will get reduced to a more affordable level. You may be able to qualify for a mortgage modification if you’ve recovered from problems in your finances and if you’re able to afford the new payment amount.
A partial claim is when your lender works with you and gets a one time payment from the FHA-Insurance fund that makes your mortgage current.
You have a chance of qualifying for partial claim if:
- Your loan is 4 months delinquent but not more than 12 months delinquent
- You can start making full mortgage payments
The U.S. Department of Housing and Urban Development will pay the necessary amount that makes your mortgage current after your lender files a Partial Claim. You will need to execute a Promissory Note, so a lien will be placed on your property until the Promissory Note is paid.
Promissory Notes are due when you sell the property or when you pay off the first mortgage, and they are also interest free.
A pre-foreclosure sale enables you to avoid a foreclosure by selling your property for an amount less than the necessary amount to pay the your mortgage loan. You may be able to qualify for this alternative to a foreclosure if:
- You’re able to sell your property within a 3 to 5 month period
- You’re at least 2 months delinquent on your loan
- Your lender obtains a new appraisal that demonstrates your home meets the HUD program guidelines
Deed-in-lieu- of foreclosure
This alternative should be your last resort! You attempt to voluntarily give back your property to the lender. This won’t save your house, so you won’t be able to keep your property. However, at least this option is not as damaging to your credit as a foreclosure is.
You will be able to quality for this alternative if:
- You do not have another FHA mortgage in default
- You’re in default and can’t qualify for any other option
- You were unsuccessful at selling the house before foreclosure
As you can see, some of the alternatives available to help you avoid foreclosure are more desirable than others. You may not be able to qualify for some of these alternatives, but it’s important for you to know that you do have options so that you can exhaust them.
If you are facing a foreclosure and are running out of options, you need help. Here at 123soldfast we are not just in the real estate business. We’re in the helping business. Give us a call at 713-322-3861 and we’ll be happy to help you figure out your best option!