If you are missing mortgage payments, you might be dreading the thought of foreclosure. With your finances in shambles, the fear of losing your home likely keeps you up at night. While you might feel hopeless, you still have ways to get out from under this. Believe it or not, you can save your home.
Your options mostly depend on whether you have received a Notice of Default from your lender. Keep reading for some tips to consider to avoid foreclosure.
1. Contact your lender and work something out
The Federal Trade Commission recommends reaching out to your lender to avoid default. Your lender may be open to allowing you to make up payments via a repayment plan. The term for this is forbearance. You may also be able to work out a loan modification to make your payments more affordable.
2. Bankruptcy
If you are unable to get your lender to agree to forbearance or modification, you might want to consider filing bankruptcy. Chapter 13 bankruptcy in particular allows you to keep your home. Instead of surrendering your mortgaged house, you will be subject to a debt repayment plan over a period between three and five years.
3. Selling your home
If your real estate market is strong enough, you might be able to sell it and pay off your mortgage debt. In this case, your lender may postpone foreclosure while your home is on the market. You may also be able to pull off a short sale, which is when you sell your home before the lender forecloses and you agree to pay the balance between the mortgage balance and sale price.
Preventing a foreclosure can be stressful. If you are unable to modify your loan or make up your payments, bankruptcy or selling your home can have lasting financial effects. Homeowners should not make these decisions without professional legal and financial advice.
