03 Jul Can I Stop a Foreclosure?
Life events happen, and when they do it can mean that you can find yourself in a position where you’re unable to pay your mortgage. Three missed mortgage payments will mean that you’re in danger of foreclosure, but that doesn’t mean that is your only option.
First and foremost, it’s important to communicate immediately with your lender. By doing nothing you risk far more issues down the road. As soon as you have missed one payment, it’s important to start to put a plan in place if you know that you are in danger of missing more payments down the line.
Here are three ways that you can avoid a foreclosure from happening, however all options come with caveats.
- Short Sale – A short sale takes place after your lender files a notice of foreclosure but prior to your house going to auction. By law, a lender must consider an offer from a buyer. After a bank forecloses on a house they will resell it, so a short sale can save them time and money. A short sale can help you to avoid foreclosure, so continue to try to sell your house even after the bank initiates the foreclosure process. It is important to remember that you will need to sell the house for enough money to pay off the loan.
- Bankruptcy – Bankruptcy will put a halt to a foreclosure immediately as federal law stops any and all collections from happening once you file. However, you will still be liable for the payments, but you will have more time and will most likely be put on a payment plan. This option can be expensive due to legal fees required to file for bankruptcy.
- Deed in Lieu – This is where you sign over the deed to your house to the lender and avoid foreclosure by volunteering to give your home back to the bank. This option is not used as frequently. Lenders tend to avoid them as it also means the lender will need to pay off any lines of credit or second mortgages.
Foreclosure can be avoided, but all methods will affect your credit and might even cost you more in the long run. It’s always best to avoid getting to this point, but life can be unpredictable. At Core Properties, we can help step in while you still have options.