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How to Avoid Foreclosure and Keep Your Home
You lost your job recently? Or someone in the family is going through an expensive medical treatment?
These reasons are sufficient to make you fall behind on your mortgage payments, isn’t it?
As far as your home is considered, it is not yours technically until you’ve paid the mortgage in full. Till that time, you and the bank (or lender), collectively owns the home. Hence, when you don’t pay the mortgage on time, the bank can come up knocking, which is not a good sign.
It is here when the legal proceeding, ‘foreclosure’, comes into play and it can result in selling your home.
Sounds Scary?
It is understood how challenging the situation can be when on one hand you are dealing with financial crisis, and on the other hand, your home is being taken away.
Don’t worry! In such a situation, all you need to do is act smartly. Yes, some simple smart move and ideas can save your home. Find out some helpful tips here;
Special Forbearance
If you are in a medical emergency or dealing with a decrease in income due to which you couldn’t make mortgage payments on time, but haven’t lost the lender’s faith, there is a scope to save your home. Giving a valid reason to fall behind the missed payments, allow you to benefit with special forbearance.
Actually, in such cases, the lenders can consider your financial circumstances and consent to a repayment. Thus, you will temporarily owe lower payments. But you will have to assure your lender to abide by the new repayment plan in future.
Reinstatement
If you feel nothing can help you, reinstatement might appear to be a solution. For those who are behind mortgage payments, it allows them to pay back the amount in a lump sum payment. Although this might include some interest or/ and penalty charges, yet it is a saviour for the time being.
Mortgage Modification
Emergencies don’t come with a notice period, but yes they might be just a short-term financial hitch which would be fine after few days. So, you can switch to loan modification which allows you to refinance your mortgage loan. And in this case, you can even extend the term of your loan.
Generally, the lender settles for some special modification in your monthly mortgage payments which would be within your financial means. But to qualify for it, you must persuade your lender that the monetary issues are temporary and will soon be resolved. Hence, make sure you are ready to do it!
Short Refinance
When things are not fine, why not request lender to forgive some part of your debt? Yes, it is a possibility with a short refinance, where the lenders have the right to refinance the remaining debt, may be into an entirely new loan.
Opt for a "Hard Money" Loan
What if your lender refuses to refinance your loan? Yes, there are possibilities for this to happen if your lenders consider you as a high-risk borrower. So, is there no escape? Well, in this case, you can contact a private lender to refinance with a hard money loan.
Here you need to know that hard money loans might buy the time you need to avoid foreclosure but they come with astronomical interest rates and fees.
Hence, if you are at risk of defaulting on your mortgage, or are already behind on your payments, implement these ideas to keep your house. As you are emotionally attached to your property, you can’t let it go easily.
But, still if there is no other option rather than selling, then sell your home to the one who can offer you a fair all-cash on your house.
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