How to Stop Foreclosure on Your Home
In the US, about 1 in every 2058 homeowners experiences a foreclosure. Failing to pay a mortgage is something many people never anticipate at the time of borrowing it. But some extenuating life circumstances can force you to stop making your monthly payments.
This puts your home at risk of foreclosure. Dealing with this fact can be quite depressing. The situation can also worsen if your property’s worth is less than the amount you owe. In this case, your lender can pursue a deficiency judgment.
As with most problems, there are several workarounds for foreclosure. Here, we’re going to show you how to stop foreclosure.
Communicate with Your Lender
Some life circumstances, such as losing a job, can be understandable, and some lenders can empathize with your situation. So, when you realize you won’t make your payments, reach out to your lender and tell them about your situation.
Some will gladly adjust your plan to make it more affordable for you. If your mortgage is an adjustable loan, your lender might change or freeze your interest rate. Do not wait until you’re unable to pay to contact your lender.
Prevent Filing of a Notice of Default
Some lenders may not want to foreclose, but they will file a Notice of Default. This helps to protect their interests, but you should strive to prevent that from happening. First, don’t get embarrassed or snub letters from your lenders. This only worsens your situation.
If you miss payments for several months, ask your lender to consider forbearance to give you time to work out your options. Also, consider asking them for forgiveness. These options allow you to prevent the filing of a Notice of Default.
Sell Your Home
Another way for stopping foreclosure is selling your home. This is known as a short sale, and you can contact your lender to discuss it. Selling can be a great idea if you have positive equity.
The trick here is to sell it quickly. If you take longer than the average time to sale, foreclosure rates will be higher in the buyer’s market. Once you sell the house, your lender will be repaid, and you can walk away.
Apply for a Loan Modification
You don’t want to wait until the last minute when things become bumpy. Applying for a loan modification can help you delay a foreclosure because the lender could be prevented from dual tracking.
This means that your lender can’t proceed with foreclosure even when your loan modification application is pending. When it’s approved, the foreclosure will be stopped allowing you to keep up with the modified payments.
File for Bankruptcy
This is usually a last-minute action, but it can help with stopping foreclosure. Usually, if the foreclosure is to happen in the next few days, you can file for bankruptcy immediately to stop it.
Once you file it, the lender can’t collect the debt or foreclose your home. So, any foreclosure activity will halt during the bankruptcy process. Keep in mind that your lender can file a motion to continue the foreclosure.
Even if the court approves their motion, it usually takes a month or two for them to proceed. This gives you adequate time to explore alternatives.
Learn How to Stop Foreclosure
If you anticipate a possible delay in keeping up with your monthly mortgage payments, don’t hesitate to take action. You don’t need to buy a house only to lose it to your mortgage lender.
This post provides you with some of the ways on how to stop foreclosure. In some cases, you can even file a lawsuit if the lender is using a nonjudicial process to foreclose.
If you have any ideas or thoughts on home ownership, you’re welcome to share them in the comments.