If you can’t keep up with mortgage payments, the lender may foreclose and file a deficiency judgment. Contact a credit counselor or your lender’s Loss Mitigation Department to negotiate reduced payments or loan renegotiation. Selling your home may also be an option.
If you bought a home using a home loan, your lender will have taken collateral on the property. If you find you can’t keep up with your home mortgage payments, security interest gives the lender the right to proceed with a foreclosure. This may involve putting your house up for auction and using the proceeds to recoup your investment.
If your property does not sell or the purchase is not enough to cover the lender’s loan, a deficiency judgment may be filed against you. A foreclosure and deficiency judgment will seriously hamper your chances of obtaining real estate in the future. Foreclosure is a worrisome prospect for anyone, but there are options you can take to avoid it.
The first thing you need to do is decide if it will really help your financial problems to allow foreclosure to happen. If your problems are temporary in nature, such as a sudden job loss, then it may only be a matter of time before you become financially viable again. On the other hand, your debt problems may be so great that foreclosure would be the best way to erase them.
Credit counselors can provide professional advice and help with debt problems. They can negotiate with lenders to reduce interest and payments to avoid foreclosure. They will help assess your financial and debt situation and create a plan to help you with credit and debt problems now and in the future.
Another option is to contact your lender directly. Lenders make money by collecting your principal and interest payments. It is not in their best interest to proceed with a foreclosure. If you are having temporary financial difficulties and you can create a plan that is beneficial to both you and the lender, then the lender may be understanding.
Contact the lender’s Loss Mitigation Department and inquire about reduced payments for a few months until you are financially viable again. You can even suspend payments for a few months. If you reach an agreement, make sure you get written details about the suspension or reduced payment plan.
Another option may be to renegotiate your current loan. You may have bought your home when interest rates were high, and your payments may reflect this. You can try refinancing your loan at a lower interest rate to solve your cash flow problems. Get quotes from different lenders to get the best interest rate on your refinance.
A final option to avoid foreclosure is to simply sell your home yourself. Your debts may have become too large to handle, and selling your home can eliminate them and stop a bad credit history due to foreclosure. You may not get your ideal price if you’re trying for a quick sale, but it’s a more financially sound option than foreclosure.
Smart Asset.
Protect your devices with Threat Protection by NordVPN
