One of the worse situations is having to deal with foreclosure especially since foreclosure is the typical result of unexpected and potentially unavoidable life occurrences such as job loss, death or medical issues. A devastating occurrence can ensue when a homeowner is notified of foreclosure proceedings by their bank.
However, there are steps you can take in order to delay or even stop foreclosure before notice has been given or once the process has begun. 10 ways to stop foreclosure that you may find helpful are listed below.
Stopping a Foreclosure Before It Begins
- Contact your lender and request time to catch up payments. Foreclosing on your home is not the desired outcome for your lender, and they may be able to restructure your payment plan, also known as forbearance, to be more affordable and realistic for you.
- Requesting a change to the terms of your loan with your lender on an adjustable loan is a possibility. Your lender may be able to lower your interest rate to one that works better for your financial circumstances.
- Refinancing your home loan is a popularly sought option when a homeowner is at risk of foreclosure. If your lender agrees, refinancing will allow you to add your missed payments into your overall balance and restructure the loan terms to work better for your budget.
- Sometimes a lender will allow you to restructure your loan to accommodate your missed payments; essentially this will make your monthly obligation higher, but you will no longer be behind on your mortgage payments.
- This is usually agreed to by most lenders who are already behind on their payments, but a loan modification is something that those who have experienced a financial hardship can request from their lender. This option is conducted under Home Affordable Modification Program (HAMP). Extending the length of the loan to permanently lower the monthly payments can benefit the homeowner. Maintaining steady and immediate contact with your lenders so that you can keep options like these open is important.
- If your loan is through Fanny Mae or Freddy Mac, it is advisable to apply for Home Affordable Refinance Program (HARP). This requires being current on your mortgage in order to be eligible. If it is approved, you can get your loan back within the realm of affordability.
- A program you can apply for called Home Affordable Foreclosure Alternatives (HAFA) is available for restructuring if your loan is not reached. You won’t be able to stay in your home if this program is approved for you. Some beneficiaries also qualify for $10,000 in financial assistance to find a new home.
Stopping a Foreclosure After It’s Begun
- If you have the option to sell your home, and your home is worth more in the market than you owe to your lender, this could be a good option once you’ve been notified of foreclosure intentions. You will need to act fast and most likely employ a real estate agent to ensure the process goes smoothly.
- This option will still affect your credit, however speaking with your lender on the possibility of a short-sale once foreclosure proceedings have begun is an option to lessen the impact the loss of your home will have on your credit. Essentially, enacting a short-sale on your home will allow you to sell it for less than you owe on your loan. The lender will have to agree to accept less than is still due on the loan.
- Declaration of bankruptcy should always be considered a last option, but if you go this route, it will stop all foreclosure proceedings temporarily until you can have your finances and assets assessed in court and terms of your bankruptcy can be arranged.