How to Avoid Foreclosure 4 Options
When you fall behind on your mortgage it is a stressful and emotional time for you. You start to wonder what your options are, not only with your current home but also for your family going forward. This article is meant to be a brief overview of options you may have when you may be facing foreclosure.
* Full Payoff – Either by selling or refinancing your home. You pay off the ENTIRE balance which includes any payments you may be behind, and charges you may incur from being behind like late fees or attorney fees. Most people in foreclosure cannot qualify for a loan to refinance, but there are rare instances where it is possible so this option would most likely apply if you sell your home..
* Loan Modification or Workout – Sometimes a lender will offer you an alternative solution. They will modify the terms of your loan and give you an option to work out your trouble. Usually the lender will look for a payment from you for a portion of what you are behind, and then monthly payments on what remains. While this is an attractive option, you will need to request this, and get approval from your lender. Remember this option will likely not stop late payments from being reported to your credit until you have paid the full amount you are behind. Also the lender may not drop any foreclosure action, just suspend action on it while you are making payment. This means that if the workout agreement is violated in the future, the foreclosure can be proceed quickly without having to start back at “Go”.
* Short Sale – If you can demonstrate that you have sold your home for the highest possible amount, and you have no other assets to give the lender, you may be able to get the remainder of the amount owed to be forgiven by both the first and second mortgage lenders. If you chose to proceed with this option, make sure to find both a Realtor and attorney with experience in short sales. Their experience can mean the difference between success and failure.
* Bankruptcy – A competent bankruptcy attorney can tell you whether or not this solution can help with your situation. There are many changes to the bankruptcy laws recently. Seek a lawyer with experience in bankruptcy and ask for their advice in your situation. As usual, here in Connecticut, I recommend Greg Arcaro.
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