Are you behind on your home mortgage payments, in forbearance, or facing foreclosure? If you cannot find a way to meet your financial obligation to get caught up on your mortgage payments, your home will go into foreclosure and your lender will take possession of it. It's scary to think you could lose your home when you get behind on your mortgage payments. So what can you do to survive a foreclosure or even avoid it?
When you've missed 3-4 mortgage payments, you'll be faced with foreclosure and could lose your home. Your mortgage lender will take legal action to try to recover the balance of your mortgage loan, selling your home to the highest bidder. Let's look at some foreclosure prevention alternatives to keep you in your home.
Avoiding Foreclosure
If your house is scheduled for a foreclosure sale, bankruptcy can be used as an option to delay the foreclosure. When you file for Chapter 13 or Chapter 7 bankruptcy, it forces your creditors to immediately cease collection activities. Chapter 7 bankruptcy is temporary and provides 2-4 months to find a solution to pay off your debt. Chapter 13 bankruptcy is a better solution as it can help you catch up on payments in arrears by providing a 3-5 year repayment plan, helping you avoid foreclosure altogether. There is a twist. The lender can come back and file for a motion to lift the automatic stay (reverse the bankruptcy filing) which would give them permission to move forward with the sale of your home.
Filing for bankruptcy could save you from losing your home.
Pay Down Mortgage Debt
- Take on an extra job
- Cancel recurring subscriptions
- Rent a room in your house
- Sell 1 of 2 cars
If you're given the legal opportunity to pay mortgage payments in arrears, you'll need to find ways to earn extra cash. Consider getting a second job, renting out a room or two in your house, cutting unnecessary expenses like tv subscriptions, or getting rid of an extra vehicle to help pay current and past mortgage payments. Heck, if you have an adult child living at home, charge them rent! Avoid losing your home by finding creative ways to earn extra cash to pay down your mortgage debt.
Meet With Your Lender
Talk to your mortgage lender if you are behind on your mortgage payments. Your lender may not be eager to foreclose on your home but, instead, be willing to work out a plan to keep you in your home. Ask your lender about reinstating your loan or entering into a forbearance agreement. A forbearance agreement allows you make reduced mortgage payments, or no payments, for approximately 3-6 months. Consider the money-making tips provided earlier because you'll need to prove that you can afford future mortgage payments.
Your lender may agree to a loan modification. This agreement adjusts the loan terms and usually lowers your monthly mortgage payment. You'll end up with a longer loan term and a reduced interest rate, but the past due mortgage payments will be added to the loan balance.
Your mortgage lender may be able to reduce your monthly payments or delay payments for 3-6 months.
Certified Bankruptcy Specialist
As a struggling homeowner who's behind on mortgage payments, you'll want someone on your side who understands what it takes to avoid foreclosure and can help get you back on your feet. If you've filed for bankruptcy and want to avoid foreclosure, seek the assistance of a real estate agent who is a Certified Bankruptcy Specialist (CBC). A CBC certified agent can work with mortgage servicers to help you settle your mortgage debt, or if you can't find a way to pay back your debt, they will help sell your home to avoid further financial distress.
Short Sales and Foreclosure Resource (SFR®)
If you're facing foreclosure or a short sale as a homeowner, find a real estate agent who is certified as a Short Sales and Foreclosure Resource (SFR®) specialist. A SFR® certified agent will possess knowledge that can help you limit risks, direct you to legal professionals who can help with financing and tax issues, negotiate with lenders, qualify you for short sales if that should become necessary, and much more.
To avoid foreclosure, you may be able to sell your house
through a short sale instead.
Conclusion
Facing foreclosure is downright scary and you'll want to take advantage of any opportunity that can save you from losing your home. Talk to your lender before you get so far behind on your mortgage payments that you cannot keep your home. Talk to a CBC or SFR® certified real estate agent for support and to learn about options to avoid foreclosure or a short sale. We wish you the best as you work to keep your home.
