How do I stop foreclosure on my home?
If you have missed one or two mortgage payments and you have not heard from your mortgage company, you will. If you do not have the resources to make a mortgage payment it’s time to put together a plan and decide what course of action you should take.
If keeping your home is your first priority, the first step is to conquer the fear. Face it. Do not stop answering the phone or reading your mail. You will need a plan of action to save your home. Waiting too late or until the mortgage company has posted a Notice of Trustee Sale on your front door may eliminate your options.
Below we will discuss several steps you can take now to potentially save your home.
- Generate more income
The first bit of advice to potentially save your home is to attempt to generate more income. This may seem difficult but generating several hundred more dollars each month could be as easy as getting a part-time job, selling personal items, or asking friends and family for a loan.
Another option is to cut expenses. Who doesn’t have a gym membership, Netflix account, or morning coffee that they cannot eliminate? Sometimes small cuts can add up to big monthly savings.
- Talk to your lender.
Contact your lender immediately if you have missed a mortgage payment. Have a plan and be able to articulate it to the lender. Discuss the option of temporarily modifying the loan terms and find out if the lender can help.
Another option is investigate whether it is financially feasible to refinance your mortgage. Although your lender may not be able to help you do this, they may be able to recommend another broker.
Unfortunately, this option may not be available to all homeowners, especially those with a poor credit rating. But if you are able to refinance your home, you may be able to lower your monthly mortgage payments and get a lower monthly interest rate.
- Sell your house
Another method to avoid home foreclosure is to sell your house prior to the foreclosure. Although this would have been challenging several years ago, many areas in the U.S. have seen a significant improvement in the housing market. The benefit of selling your house and avoiding the foreclosure can be huge, not only for your credit score, but also your peace of mind.
- Consider filing for bankruptcy
Another option to stave-off foreclosure is to file for bankruptcy protection. Although many debtors will not qualify for Chapter 7 bankruptcy- and it’s less likely to protect your home- many debtors may find that filing Chapter 13 bankruptcy can protect their home and allow them to make mortgage payments in arrears over a 3 or 5 year repayment period. Talk to a lawyer prior to filing bankruptcy. Bankruptcy is not right for everyone and can have significant financial ramifications.
- Consider a reverse mortgage
Reverse mortgages may unlock the equity in your home, but they are not available for everyone. They are, however, available to many seniors over the age of sixty-two. A word of warning- a reverse mortgage can have serious ramifications for your children and the future of your estate and should not be considered without first discussing the option with a CPA or estate planner
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