If you are unable to make your mortgage payments, the mortgage lender may proceed with foreclosure as a last resort. If you are having trouble paying your mortgage installments, it’s best to immediately let the lender know. Doing this will likely buy you some time and you can look at certain alternatives, like:
1.Sell your home
If you don’t owe too much but you are unable to continue making your mortgage payments, you may want to sell your home and repay the loan amount to the lender. Keep in mind that you may not immediately find a buyer.
2. Consider applying for a loan modification
Your lender, by law, cannot go ahead with foreclosure if your loan modification application is in a review. A loan modification is when the lender changes the terms of your loan to make it more affordable for you. The steps to apply for a loan modification is similar to applying for a regular loan.
3. Consider a short sale
If the amount you owe is more than what your home is worth, you may want to consider a short sale. While a short sale does impact your credit score, it doesn’t do as much damage to your score as a foreclosure. The chances of your short sale application getting approved are better if you provide proof that your income has dropped making the mortgage unaffordable or if you prove you have to mandatorily relocate due to your job.
4. File for bankruptcy
As a last resort, you may want to consider filing for bankruptcy. Doing this will immediately stop foreclosure of your home, or at least give you some respite. So, although it will likely take a big hit on your credit score, you may want to consider bankruptcy if you want to keep your home.
5. Get a deed in lieu of foreclosure
You may be able to sign the deed to your property back to the mortgage lender to avoid foreclosure. This, however, is not something that lenders favor doing since there is a risk that the borrower may sue them later.
Losing your home to foreclosure is anything but pleasant, and you may just be able to avoid this stressful process if you consider the alternatives mentioned above!