How To Prevent Foreclosure?
Homeowners who want to stop foreclosure often dread dealing with the reasons that brought them to the place of being in foreclosure. Going through this process can be depressing, especially when one thinks of the emotions attached to how they bought their home and what all dreams they had. If they think back of all those things, losing a home would probably be the thing they might have never thought of. In this article, we will discuss the best ways to prevent foreclosure.
What are the reasons for a foreclosure?
Sometimes homeowners go through such unforeseen circumstances that they fall under the clutches of foreclosure. Here are, few of the reasons that delay the mortgage and can lead to foreclosure:
- Unemployment/ job loss
- Medical emergency
- Death in the family
- Several debt obligations
What are the best ways to prevent foreclosure?
The best way to stop a foreclosure is to file for a Notice of Default. Lenders often do not want to foreclose but file a notice of default to protect their interests. So, if you think you are unlikely to meet your mortgage, you must call your lender. You should not feel embarrassed or ignore letters from your lender. Depending on your situation and circumstances, there are loan modification options your lender might propose:
- Your lender might agree to wait before taking legal action against you so that you can work out a repayment plan that is convenient for you; this type of plan is called forbearance.
- Sometimes, when you agree with the lender that you will be current after missing a few payments, your lender might waive off your obligation. It is called debt forgiveness, but it is not very common.
- When you have pending payments, the lender might allow you to a flexible plan where you can repay a part of the money that is pending. For example, if you owe $2000, what the lender can allow is to pay $300 or a similar amount per month along with the monthly payment.
- If your mortgage is an adjustable loan, it is possible that the lender might freeze the interest rate before it increases. It may also reduce the interest rate to a manageable rate for you.
- If you have sufficient equity and meet with the lending guidelines set by the lender, it might increase your loan balance to include the back payments. It is also called as loan refinancing.
- You can opt for certain government loans that contain provisions that allow homeowners who meet certain criteria to apply for another loan. This loan is enough to pay back the missed payments, and it is called a partial claim.
If you have further queries on the best ways to prevent foreclosure, it is good to connect with a HUD-approved counselor or an attorney who has good experience in the field. These people are experts who have saved several people from foreclosure.