Let’s face it, the inability to make payments is embarrassing, but if you find yourself unable to make your mortgage payments there are a few simple things you can do to avoid going into foreclosure. The thought of losing your home is scary so if this applies to you, read the following tips to save your home and your credit score.
The first time you realize you can’t make your mortgage payment you need to contact your bank immediately. Many people who miss or default on payments don’t contact their bank. This is a big mistake, you need to work with your bank to keep your home. Your lender can discuss options open to you, and your honesty and willingness to work with the bank goes a long way to repairing the situation. If you need to contact your lender about your situation the following are some links to guide you through this process. This link has tips to avoiding foreclosure by the US Department of Housing and Urban Development, and this link fromHUD walks you through the steps you can take to work with your lender.
Familiarize yourself with your mortgage and your mortgage rights. Review Florida laws, particularly Chapter 702, Florida Statutes and Section 45.031, these statutes will teach you about foreclosure proceedings. This will provide you with ample information about the foreclosure proceedings your bank can take regarding your situation. You can even find some help through local institutions. Institutions such as Freddy Mac provide foreclosure prevention information sessions. To check for a meeting close to you visit the Freddy Mad link.
You can even receive help from a non-profit housing counselor for free. Make sure you’re using a counselor that is government approved to ensure you’re getting up-to-date information. The counselor is supposed to help you understand the legal information as well as the bank’s jargon to give you a complete picture.
Your lending institution might have a few options for you to consider. The first is reinstatement, where the bank agrees to let you pay the total amount you are behind, in a lump sum payment by a specific date. Banks usually only agree to this if you can prove that in the immediate future you will be receiving a sizable amount of money (a work bonus, inheritance, etc). However, this can come at an additional cost to you. You might be responsible for paying late fees and other costs associated with a reinstatement plan.
Your lender might offer you a forbearance, which is a temporary reduction or suspension of your mortgage payments while you get back on your feet. Usually forbearance is granted with a condition similar to reinstatement where you need to prove you will be able to pay a lump sum at a certain date in time or the bank might add a repayment plan for you to pay off the missed or reduced mortgage payments.
If these avenues fail you there are still some measures you can take to avoid foreclosure. You can try to sell your house and give the proceeds of the sale to the bank, whether the proceeds are more or less than what you owe, in order to write off the portion of your mortgage that exceeds the net proceeds from the sale.
You can voluntarily transfer your deed to the lending institution, this cancels the mortgage. But in order to do the deed-in-lieu-of foreclosure you must have tried to sell your house for at least 90 days. You can only try this tactic if there isn’t multiple liens against the property, judgments from creditors, or tax liens.
Another strategy is an assumption. This is where a qualified buyer takes over your mortgage debt and makes the mortgage payments, even if the mortgage is non-assumable. If this is successful you might be able to sell your property and avoid foreclosure.
Refinancing is another option, but in some cases can be used as a predatory tactic on the part of the bank. Only use this option if it helps you to pay off another debt and thus frees up money that will allow you to make your monthly mortgage payments without further struggle.
Only use HUD approved companies to deal with mortgage troubles, there are many predators out there who take advantage of people in your situation. Avoid foreclosure recovery scams by refusing to sign contracts and papers without a lawyer present who represents you. And if you find yourself in a tight spot, try asking another creditor such as a credit card company to accept a late payment so you can pay your mortgage on time.
To avoid these troubles when looking for a new home you need to work out your monthly expenses to be sure of the kinds of payments you can make. Never purchase a home before knowing your financial situation. And always work with a mortgage specialist who is interested in your interests.
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