An effective guide on how to stop foreclosure
Are you facing a foreclosure on your home? Wondering how you can stop foreclosure proceedings?
If you’ve defaulted on your mortgage payments then your lender may have initiated foreclosure proceedings. While you may be feeling hopeless when facing a foreclosure, there are ways that a foreclosure can be stopped and you have a few options for fighting it.
Below we’ll tell you about the ways that you can stop foreclosure in its tracks.
1. Negotiate With Your Lender
One of the best ways to stop a foreclosure is to simply negotiate with your bank. Many lenders would like to work things out with you and find a way for you to get back on track, rather than foreclosing on your home.
Often a lender will help you find a way to get back on track with your mortgage. If you have good reasons for missing payments or you have undergone some significant hardships and have proof to back it up, some lenders will be willing to work with you.
2. Get a Loan Modification
Making a loan modification is another option you may want to consider if you want to save your home.
A loan modification changes the terms of your loan to better fit your current situation. These changes could include lowering the payment amount, the interest rate, the loan amount, or even extending the term of the loan.
If your income has changed or there is some other reason the initial loan terms are no longer suitable for you, you may be able to change the terms to something you can handle. You’ll also be able to stop the foreclosure as a result.
3. File For Bankruptcy
While it’s not a pretty option, bankruptcy can also be a way to save yourself from a home foreclosure. Filing for bankruptcy will stop a foreclosure in its tracks, at least for 1 or 2 months, at which point the lender may try to appeal the bankruptcy and go through with the foreclosure.
There are two types of bankruptcy: Chapter 7 and Chapter 13. With the latter, you’ll set up a payment plan which includes debts including your mortgage. As a result, you may be able to keep your home when filing for bankruptcy.
4. Try a Short Sale
Though there are some tax implications you’ll need to think about, a short sale is another option you can use to stop a foreclosure. Unfortunately, you won’t get to keep your home with this option.
A short sale will allow you to be released from your mortgage and you’ll be able to sell your home instead of suffering the consequences of a foreclosure. While it will affect your credit, it won’t have as severe of an impact as a bankruptcy or foreclosure will.
If you want to go through a short sale, you’ll need to sell your home fast. You may want to get in touch with a fast home buying company to make the process as easy as possible.
5. Initiate a Deed in Lieu
Similarly to making a short sale, initiating a deed in lieu of foreclosure is another option you have for stopping foreclosure. This is what happens when you volunteer to give the deed of your home back to the bank and sign it over to them, instead of going through a foreclosure.
This can be an easy option for avoiding foreclosure but many banks won’t be up for it because of the risks they’ll face. If they do, however, this can be a great option that will make avoiding a foreclosure a simple process.
Finding a Way to Stop Foreclosure
If you want to stop foreclosure, you need to consider the options above carefully. While it can feel overwhelming and tress to be facing a foreclosure, as long as you keep a level head and try some of the options above, you may be able to prevent the loss of your home.