Dealing with a foreclosure on your home is not a situation that you’ll want to find yourself in, especially since it’s generally the result of unexpected and potentially unavoidable life-altering events such as losing a job, experiencing medical problems, or even death. When the bank notifies a homeowner about foreclosure proceedings, it can be downright devastating.
Thankfully, there are some steps that one can take to successfully delay or even prevent a foreclosure either before any type of notice has been given, or even once the process has begun. Keep reading if you want to learn 10 ways to stop a foreclosure from happening to you.
- Reach out to your lender and ask for more time to catch up on delinquent payments. Believe it or not, your lender doesn’t want to have to foreclose your property on you which means they will be more likely to restructure your payment plan. This is known as forbearance, and it makes things more affordable and realistic for you.
- Requesting that the lender adjusts the terms of your loan is another legible possibility. They may be able to lower your interest rate to a plan that works better for your financial situation.
- Refinancing your home loan is a popular option for a homeowner if their house is at risk of being foreclosed on. If your lender agrees, refinancing will let you add any payments that you missed to your overall balance, which in turn restructures the terms of the loan to work better with your budget.
- In some cases, a lender may let you restructure your loan to accommodate any payments that you missed; essentially this will raise your monthly obligation, but on the upside, at least you won’t be behind on your mortgage payments anymore.
- A lot of lenders will only agree to this if you aren’t already behind on payments, but a loan modification is something that those who have dealt with financial hardship can ask for from their lender. HAMP (home affordable modification program) can benefit the homeowner by extending the length of the loan which will permanently lower your monthly payments. If you are experiencing financial hardship, it’s important to stay calm and contact your lenders immediately to deal with it asap, and also know your options.
- You can apply for the HARP (home affordable refinance program) if your loan is via Fanny Mae or Freddy Mac. To do this, it’s required that you are current on your mortgage to be eligible. If you find yourself approved for this program, you can get your loan back within affordable terms.
- If you’re unable to find a way to reasonably restructure your loan, there is a program called HAFA (home affordable foreclosure alternatives) that may be able to help. If you are approved you won’t be permitted to stay in your home, but it will prevent the process of foreclosure from proceeding. You will also no longer be held responsible for any delinquent unpaid mortgage debts. In some cases, certain beneficiaries may also qualify for $10,000 in financial assistance to help them locate a new home.
- If you can sell your home, and it’s worth more than you owe to your lender (check the market), this could be a perfectly viable option once you’ve been notified about the bank’s foreclosure intentions. In this case, you will need to act fast and employ a real estate agent to ensure the process goes according to plan.
- It’s worth pointing out that this option will still impact your credit, however, discussing your situation about the possibility of a short sale with your lender once the foreclosure proceedings start can help to lessen the blow the loss of your home will have on your credit. A short sale on your home allows you to sell it for less than what you owe on your loan, but the lender will have to agree to accept less than what is still due on the loan.
- Declaration of bankruptcy should be your last option, but sometimes it’s the only option some people have. It will temporarily prevent all foreclosure proceedings from continuing until you have your finances and assets assessed in court, which in turn allows for terms of your bankruptcy to be arranged.