As a homeowner with a mortgage still on your home and you are afraid of imminent foreclosure due to a problem with your finance and your mortgage is getting unpaid. Or you are already at the brink of your service taking up your home. Well, both are avoidable disasters.
Let’s start with a little education on what foreclosure means.
What is foreclosure?
Foreclosure is a situation whereby your lender or servicer takes up your home due to your inability to pay up your loan after a period of agreed-upon time. Under Federal Law, a lender can only start taking steps towards foreclosure after 120 days of failure in payment of your mortgage loan. By the way, check here for the best bankruptcy attorney in Knoxville.
Below are the steps to take to prevent foreclosure.
Understand what is at stake.
Majorly, most homeowners only start seeking help after there is an imminent foreclosure at hand. While this is bad, it may pose difficulty in rectifying.
From the inception of your failure to pay back your mortgage as planned, contact your servicer to map out a new plan.
Know your Right
Gather up all documents relating to your mortgages such as your loan documents, copies of the mortgage (or deed of trust), and the promissory note in a case file. Also, you might want to include in your file other documents like your monthly billing statements, records of payment you’ve made, property tax information, correspondences between you and your servicer.
Now read up all the documents to understand what chances are still open to you. You should concentrate on the Mortgage documents and promissory note as both will contain important information as to options that may be open to you for pursuing.
The following are options available for you to pursue to avoid foreclosures.
Reinstatement
This allows you to pay a lump sum payment before or at an agreeable time of which might include interest or penalty charges.
Short Refinance
This is the situation whereby your servicer forgoes some parts of the debt and refinance the remaining mortgage payment into an entirely new loan.
Forbearance
This is the process whereby you can convince your servicer a glitch in your finance due to a sudden decrease in income or a medical emergency prevents you from servicing your debt.
This will allow your servicer to map out a new mortgage plan which may temporarily lower your repayments plan or even suspend them for a while.
Mortgage Modification
Mortgage modification allows you to refinance your debt or allows for an extension of its term. Your servicer will settle for a repayment plan that is within your financial means.
To qualify for this, you must be able to convince your servicer that your financial problems are but temporary issues and will soon get resolved.
Review Your Budget
Review your spending habits and create a realistic financial budget to adhere to until your situation looks promising. You might want to consider reducing some of your expenses in the meantime. Cut out needless spending and reduce money spent on non-basics optional expenses.
Seek The Assistance of a HUD-approved Housing Counselor
You can contact a free HUD counselor in your state that will advise you and guide you on the necessary steps to take in avoiding foreclosure of your home. Also, they are in a better position to be informed about special programs that could be of help to you.
Understand The Foreclosure Law in Your State
Every state has its foreclosure laws and timelines, hence why you need to understand that of your state. This will include understanding how long you can work out a deal before you lose your home to foreclosure, your rights, and protections during the foreclosure process. This can get online through legal research or contacting a local foreclosure lawyer within your state.
Pre-foreclosure Sale
After exhausting all options open to you and being convinced about your deteriorating finances. Your next step is selling your house to avoid foreclosure. This way you will be able to offset your mortgage with the proceeds of the sales.
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