How to Guide

Know Your Options When It Comes to Stopping a Foreclosure

The moment when you need to face the foreclosure on your home can be very challenging and scary. That is why you need to know how to handle it in the most possible way. In this article, we prepared options that you have in case something like this happens to you.

What Is Exactly Foreclosure?

Before we start mentioning the available options you have when it comes to stopping a foreclosure, let’s first explain what this term refers to. In general, foreclosure presents a legal process that mortgage lenders and banks are using in order to compensate their losses when a person who borrowed the money from them stops with the payments of the mortgage loan. If you, as a borrower use a mortgage in order to buy some property, you are obligated to make a monthly payment to the lender. This payment process lasts until you pay back the whole amount of money that your house or property is worth.

However, in some cases, the borrower is not able from some point to make those strict monthly payments of the loan to the lender. This often happens when the person is faced with some financial obstacles. What happens then is that the lender will try everything to take back the ownership of the house and sell it. At the moment when a home is foreclosed on, that homeowner will be evicted from the property and the foreclosure is recorded on the credit report, which affects the credit score.


What is your option when it comes to stopping a foreclosure?

When you find yourself in the situation where you have been missed to pay three or even more monthly payments, you will be in default or in pre-foreclosure. However, you will have some options that will help you stop the foreclosure procedure. You should know that these options and the one that you are going to choose will depend on how far along you are and how your financial picture looks. We suggest that the wisest idea you can make when you find yourself in this situation is to primarily consult with an experienced professional like here that will tell you about your potential options and what is the best thing you can do to get back on track.

You can try to work things out with the lender

One of the primary things you can do in this type of situation is to contact your lender first. This option can be beneficial for you if you had a temporary setback that is preventing you from paying monthly costs for some time and now you are able to continue with the payments every month, but you are not in the position to afford to pay those missed payments right away. In this case, your lender can be willing to work things out with you and give you the chance to conduct the proposed repayment plan that will get all of your past loans back on track. This will provide that you will not make the same thing all over again and that you will be able to continue making payments forward.

However, as a part of this new repayment plan, you can expect that your lender is going to take the amount of money you owe in those missed payments and on top of that add your regular monthly payments. This will allow you to pay back to the lender that amount you owe over a specific time that you two agree about. It is incredibly important to be completely honest with your lender when you are making a new repayment plan. You need to have a clear picture of evaluating how much you can afford to pay back every month. The biggest mistake you can make is to agree on some amount of money that your financial situation can not handle. Additionally, you can ask your lender about some other mortgage relief options. Who knows, maybe he is willing to help you out and offer some new options that can work better for you.


You can request a mortgage forbearance

In general, mortgage forbearance represent the help to the borrowers who are currently experiencing some financial problems by allowing them to put a hold on their monthly payments of mortgage for a specific period of time. While the forbearance period lasts, this loan option that you are going to use through that time gives you a chance to put in control of your financial situation and to prepare yourself to continue with regular monthly payments. Additionally, you will pay back what you accrued while you were in forbearance at the end of the agreed period of time. One thing to remember about forbearance is that you are going to owe the amount of money that was suspended at the end of that agreed period. Therefore, this means that if you were in forbearance for six months, at the end of that period, you will need to pay back mortgage payments for those six months. You can pay this amount of money either as a lump sum or choose that it is going to be a part of a repayment plan.


There is an option of applying for a loan modification

A loan modification can modify and change the terms of your current loan. This means that if you are not able to refinance, this loan modification process can help you make your monthly payments in a more effective and affordable way for you. This will logically allow you to remain in your home and get in control of your current loan situation. Generally, a loan modification will extend the length of the loan term and in that way, you are going to have more time to pay off the loan with additionally potential lowering of the monthly payment.


Know your options before taking any further steps

There are always different ways of doing things. Especially when it comes to stopping a foreclosure you should know the exact steps to take. Don’t rush into it and figure out what all your options are. It is better to be diligent than to rush into it and not get the expected result you are looking for. Take your time and be wise because the most important thing is keeping a roof over your head.

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