Is the Bank Taking Your House? Five Alternatives to Try Before Giving Up
When a homeowner is heading toward foreclosure, it might seem like all is lost, however there are a few options to still be considered. If you want to save your house, alternative measures can be taken to salvage a property investment. Many people give into the bank because they are unaware of the options they have left before foreclosure. If you aren’t financially savvy, you can work with a financial advisor to create a plan that will allow you to avoid foreclosure. Read on to learn about the specifics of these alternatives, and see if any of these options are viable solutions to your problem.
Mortgage Reinstatement
Reinstatement of a mortgage (by covering missed payments plus fees and interest on a loan soon after notice of foreclosure) is generally supported by state rules to property owner rights. In states where reinstatement does not apply, owners can request a contract modification to work out an agreement for recuperation of good standing with a lender. While the latter scenario requires acquiescence on behalf of the lender, if an owner can exhibit adequate cash to meet the terms to negotiation, most lenders will attempt to resolve the issue to stop the foreclose.
Loan Mediation
HUD-approved housing counselors offer loan mediation services. If a homeowner is experiencing difficulties meeting the terms of payment to an existing loan, a counselor can help to negotiate with the servicer of the loan. U.S. Federal Housing Administration government guaranteed loans through the Freddie Mac and Fannie Mae programs, the Rural Housing Service and Veterans Administration offer workout options to manage loan debt.
You can request information about forbearance for temporary relief from monthly payments, a lower interest rate on refinancing, or a reduction in principal loan balance in order to get all the facts. HUD-approved housing counselors can assist a homeowner in restructuring their loan debt, and recover from missed payments within a specified period of time through these measures.
Bankruptcy
Property owners facing debt risk may prefer Chapter 7 or Chapter 13 bankruptcy. Discharge of a bankruptcy still entitles an owner to their residence. You can avoid foreclosure by filing a bankruptcy to eliminate obligation to tertiary debt. The foreclosure of your home will be postponed by something called an “automatic stay” which requires that the process be suspended due to the pending bankruptcy. If you merely need a little time, this possibility could help you get things in order during the postponement. However, you should always consult a financial professional before filing for bankruptcy so that you can properly weigh the pros and cons before committing.
Refinancing
One of the most popular methods of controlling the impending threat of a property foreclosure is application for mortgage refinancing. By taking out a second mortgage on a property, an owner can pay off an existing loan, as well as reduce both interest and principal payments.
To qualify for refinancing, sufficient equity must be available to back to the loan. Property value estimates will affect a lender’s response. If an existing mortgage was issued through the Fannie Mae or Freddie Mac programs, qualification for refinancing can be sought under the Home Affordable Refinance Program.
Reverse Mortgage
The reverse mortgage option applies home equity, allowing a homeowner to redeem value from a lender. In addition to blocking foreclosure, there is no obligation to loan payments on a reverse mortgage prior to resale. The terms and perimeters surrounding your reverse mortgage will depend on where you live, so it is wise to meet with a financial advisor who can give you all of the facts surrounding this option before you begin the process.
If your home is facing foreclosure, it is not time to give up yet—as you can see, there are still viable options that create a scenario where you get to keep your home. Many people panic in foreclosure situations, and don’t explore any of their options. Even if you aren’t a financial guru, you can get professional advice and guidance that will allow you to keep your home. If you think that any of the options above could apply to you, talk to a financial advisor about creating a plan, and avoid the foreclosure of your home. Information for this article was provided by financial professionals at WBLI who specialize in bankruptcy in Halifax, NS.
Category: Foreclosure
