The "F" word and what to do???
No one buys a home with the thought of losing it toforeclosure. However, there are unforeseen circumstances that may arise such aslosing your job, illness, disability or a divorce that may put you at risk oflosing your home when you cannot afford to make your mortgage payments. If youare facing a current financial hardship and are in default or about to defaulton your mortgage, you can avoid foreclosure by talking to your lender andseeking a real estate professional to help figure out which option is best foryou. Below is a list of some of the options you might consider.
Reinstatement of Your Loan: Reinstatementis where you pay any arrearages, including fees and costs. This allows you tobring your mortgage current.
Refinance: You must have equity torefinance. The new loan will payoff your current loan balance. Usuallyrefinancing is done when you have a variable rate mortgage and you refinance toa fixed-rate mortgage, which reduces your monthly mortgage payment.
Loan Modification: A loan modificationis when your lender agrees to modify your current loan because you are upsideon the mortgage. This means your home is now worth less than you owe yourlender. Typically, the lender lowers the interest rate and extends the loanterm. Some lenders may also reduce the principal.
Short Sale: Short sales have become a popularalternative for a borrower who cannot afford to keep his or her home and is upsidedown on a mortgage. If you decide to sell with a short sale, the lender mustapprove the sale because they will have to write off the difference between theshort sale proceeds and what you owe on the loan.
Deed in Lieu of Foreclosure: Adeed in lieu of foreclosure is when you transfer ownership of the home back tothe lender and walk away owing nothing. Not every lender will accept a deed inlieu so you need to ask your lender if this is an option. Bankruptcy: Bankruptcyis serious so you should make sure you have exhausted all other options beforeconsidering filing for bankruptcy. Bankruptcy temporarily stops foreclosureuntil the bankruptcy is discharged. Talk to a bankruptcy attorney to determine ifbankruptcy is an option for you. If you are facing foreclosure, you shouldspeak with a foreclosure defense attorney who can help you determine whichoption is best for your financial situation. You may also want to speak with acredit counselor to help you follow a budget and get back on the right track.
Remember if you have any questions we are here to help, Don’tbecome another victim!