Times are tough for the real estate market and it is not helping that interest rates sometimes make it more difficult for homeowners to keep their homes. Fortunately, foreclosure is not the end. It is possible to avoid the negative consequences of this procedure even if you fall behind on the payments. Learn how to stop foreclosure by learning more about the process, why it happens, and what you can legally do.
How to Stop Foreclosure
A foreclosure refers to the process by which a bank takes possession of a property due to an unpaid mortgage. The process usually begins after the homeowner has not made payments against their mortgage over 120 days after payments are due. Once the home has been foreclosed and the homeowner is still living on the property, he/she will be given an eviction notice and must vacate the property within the specified time period. The foreclosure will appear on the homeowner's credit report and will impact their credit score negatively.
What You Can Do
Do not wait until the foreclosed property is at auction before taking the first step. Once the property is placed on auction, there is usually nothing more that can be done to keep it. However, if you have the time and the means, there are options you can turn to. The most important thing to remember is time - the earlier you act, the better chances you will have.
It is also a good idea to get in touch with your lender immediately. Contrary to popular belief, lenders would rather negotiate with you than go through the repossession process of a property. There are certain options that they could offer you that could just work. Here are a few.
1. Get the Loan Reinstated.
If you have sufficient funds, you can have the loan reinstated by simply paying up what you owe. Note that since you already have late payments you will have to pay the interest along with the principal, fees, and other expenses. Check state laws to determine if it is still possible for you to reinstate your loan. You could also check your mortgage if reinstatement is included in the agreement.
2. Ask the Lender for a Forbearance.
A forbearance is a good option for you if your financial issue is temporary. With this option, your lender will temporarily suspend your payments during the forbearance period so you can find other ways to pay your mortgage. You do, however, have to make payments within the period stated. You also need to pay the full amount that was suspended once the forbearance period is over. For example, if you owe a total of 3 months' mortgage payments during forbearance, you will have to pay either the full amount or a portion of that through a repayment plan.
3. Consider a Repayment Plan
A repayment plan is possible if you have only a few months worth of unpaid mortgage. A repayment allows you to make up for any missed payments over a period of time so your mortgage remains active. You will have to pay overdue and current amounts but you will do so within a repayment period that could be as short as 3 months or as long as 9 months.
4. Ask the Lender for a Loan Modification.
A loan modification is a type of agreement wherein the lender adjusts the terms of the loan. This is a good option to keep your monthly mortgage payments lower since the interest rate will be reduced and the loan term extended.
5. Work Out Refinancing.
If you refinance your loan, you could enjoy a better rate, pay off the old loan, and start anew. Refinancing can be done even up to the time of the scheduled foreclosure sale. In some states, the homeowner may even be able to redeem the mortgage after the sale.
6. File for Bankruptcy.
Filing for bankruptcy is an option if there are no other ways for you to keep the home. Consider this step if you have several outstanding debts that can be cleared through bankruptcy. Note that filing for bankruptcy should be your last-ditch effort. It is a temporary measure and is not a long-term solution. You will, however, delay your payments by a few months.
There you have it, six different ways how to stop a house foreclosure and save your property. If you need help stopping a foreclosure on your home or a property that you own in Denver Colorado we can help. We buy properties for cash and can help stop foreclosures even on the day of the scheduled auction.