If you are facing a foreclosure then you must be feeling worried, anxious and scared. Facing a foreclosure is definitely an added stress in your life, on top of whatever else you may have going on. The inability to pay your mortgage or running behind on payments tends to be a secondary issue, with the primary issue either being a loss of a loved one, a divorce, a job loss or a health crisis. At Chakra Home Buyers, we are sensitive to those primary issues and want you to know we are here to help you by taking care of your secondary issue…YOUR HOME. We would like to see you have hope again, so that you can get back to taking care of the other areas of your life without the added stress. We have put together a list of 11 ways to stop a foreclosure, some of them may sound familiar while others may be new to you.
Forbearance
Forbearance is when your mortgage servicer or lender allows you to pause (suspend) or reduce your mortgage payments for a limited period of time while you regain your financial footing. This option lets you deal with your short-term financial problems by giving you time to get back on your feet and bring your mortgage current. There will be discussions on how you will repay your missed payments back.
Repayment Plan
While your mortgage lender already charges you a fixed amount per month, a repayment plan adds a portion of the past-due amount to your bill for a period of several months until you’re caught up. This is best used when you are now in a better financial situation than you were in before when you were not able to make your payments.
Loan Modification
Loan modification is a change made to the terms of an existing loan by a lender. It may involve a reduction in the interest rate, an extension of the length of time for repayment, a different type of loan, or any combination of the three. Changing your mortgage terms is all about weighing the risks. If your financial circumstances are tough enough, having to pay the loan over a longer period, with more interest is a better alternative to losing your home.
Partial FHA Claim
A partial claim is an interest-free loan from HUD to get caught up on the overdue payments. The loan doesn’t have to be repaid until the first mortgage is paid off, like when you sell the property. Partial claims are sometimes completed along with a loan modification. The loan is never forgiven and will always need to be paid in a lump sum.
Refinance
You are most likely familiar with a refinance. With a refinance, you to take out a new loan to pay off the existing mortgage, including the delinquent amount, which will stop the foreclosure. You will need to have a stable income and usually have equity in the home to qualify.
Bankruptcy
Another one of the more popular ways to stop a foreclosure is bankruptcy. The moment you file for bankruptcy, an automatic stay goes into effect that prohibits your lender from going forward with the foreclosure sale. Bankruptcy can delay or stop the foreclosure process as long as the home hasn’t been sold. You can also file for a bankruptcy, which in turn will give you time to either sell your house or prolong the foreclosure so you can arrange a plan of action. One thing a lot of people didn’t know was you do not have to go through with the bankruptcy in the end. It is important to discuss this option with an attorney.
Deed In Lieu of Foreclosure
Another one of the ways to stop a foreclosure is a deed in lieu of foreclosure is a transaction in which the homeowner voluntarily transfers title to the property to the bank, in exchange for a release from the mortgage obligation. Generally, the bank will only approve a deed in lieu of foreclosure if there aren’t any other liens on the property.
Short Sale
A short sale is when a homeowner sells his or her home to a third party for less than the total debt remaining on the mortgage loan. With a short sale, the bank agrees to accept the proceeds from the sale in exchange for releasing the lien on the property.
Sell
You can sell your house to an investor or a real estate agent, both have there pros and cons and it will boil down to your position and your situation. If you are under a time constraint then an investor can pay cash and close within as little as two weeks. An investor will purchase your house in any condition and will do the repairs themselves. If you sell to an investor you will not pay any out of pocket fees. An agent will need time to list your house and show it for possibly a few days to a few months and it is more desirable that the house be ready for move in, so plan on doing the repairs before you list your house.
Get a loan
If you know a family member that could give you a loan to pay off your back payments this could be a great option. You can offer your family member interest on the borrowed money, this is usually in the lenders best interest. This is best used when you are in a position where you can now make your payments on time or will be able to soon but need to stop the foreclosure by paying the arrears.
Rent
You could rent out your house. This would take care of the future payments but you will still need to consider how you will pay back the arrears owed to your mortgage company. Paying the bank back and having future payments from a tenant may be a solution for you and will stop a pending foreclosure. You will need to fix any problem areas in the house before you rent and that will take extra money, a lot of the time this is not a great option for homeowners facing a foreclosure but it is an option for some.
Conclusion
We hope this information was beneficial for you. If you know someone who is facing a foreclosure please refer them to our site. Chakra Home Buyers takes pride in providing homeowners with information, so you can make the best decisions for yourself and your family. The list above provides only brief summaries that will require further research on your behalf, to fully understand each particular process.
For a FREE consultation on Ways to STOP a foreclosure or a FREE evaluation of your property please call us at (415) 234-0548 or fill out a form on our website. We look forward to helping you and your family in ANY situation you may find yourself in regarding your property. It is best to start looking at your options as soon as you start missing your payments. The deeper you go down the rabbit hole the less options you will find you have to save your most prized “tangible” possession…YOUR HOME.