Steps to help you avoid foreclosure
There are several options available to you to help you avoid the painful long-term repercussions of foreclosure. They start with one thing: action. If you have already received an NOD (Notice of Default) or are behind on your loan payments, this article will tell you how to avoid foreclosure on your home. To avoid foreclosure, you should first try to negotiate one of these options with your mortgage company:
Loan restructuring or modification
There are real estate companies that can negotiate with your lender’s loss mitigation department to get your loan in good standing again. There strategies you can use to get a restructure approved like a separate payment plan for your delinquencies or even adding the delinquency to the end of your loan. You may qualify for a modification, especially if you have recently experienced a reduction in income or an increase in living expenses. Sometimes it is even possible to get your monthly payment lowered.
Short sale of your home
Short sale specialists can help you get your home sold fast, before it goes to foreclosure. Here, the short sale agent negotiates with your lender to sell your home at a price less than what you owe. The mortgage company would accept less than the amount you owe on the loan, avoiding costly foreclosure proceedings. If a short sale is not successful, you can simply give the property back to the lender prior to a foreclosure sale and walk away not owing anything. This process is not as damaging to your credit report as a foreclosure would be.
There are things you can do on your own to avoid foreclosure without the help of a short sale real estate agent:
- Reinstatement – Reinstatement of your loan by paying your lender all the past due amounts to bring the mortgage current. This option is probably not available if the financial situation causing your delinquency hasn’t changed.
- Mortgage Refinance – Refinance your total debt load, or extend the term of the loan to reduce your payments. However, this is a difficult option if you owe more then your property is worth. If you have already received a notice of default (NOD) then you most likely do not have the financial ability to refinance or do a loan reinstatement. Considering bankruptcy should only be a last resort.
- Bankruptcy – You may qualify for Chapter 7 Debt Elimination or Chapter 13 Reorganization. A bankruptcy stays on your credit report for 10 years.
- Foreclosure – This is the most damaging to your credit other than bankruptcy. The mortgage company will take your home and equity. This stays on your credit for seven years.
In these tough times, many homeowners can benefit from the expertise of a real estate agent who specialize in loan modification and short sales. They routinely negotiate these options, thereby helping their clients avoid the long term consequences of a foreclosure.
Tips to avoid foreclosure
Don’t ignore the problem
The further behind you get, the harder it will be to get your loan into good standing and avoid foreclosure. Contact your loan company as soon as you realize you will have trouble making your payment. Lenders prefer to be in the lending business, not the real estate business, so they do not want your house. They all have options available to help you through tough financial periods.
Open and respond to all mail from your mortgage company.
The first notices you receive will offer good information about foreclosure prevention options that can help you weather financial problems. Later, mail may include important notices of pending legal action. Failure to open your mail will not be considered a good excuse in foreclosure court proceedings.
Know your rights
Find your original mortgage documents and actually read them so you know exactly what your lender might do if you don't make your payments. Learn about the foreclosure laws and time frames in your state.
Watch your spending
Besides your health care, holding on to your home should be a top priority. Review your financial situation and look for places you can cut spending to make your loan payment. Look for optional expenses – cable TV, memberships and entertainment that you can eliminate.
Contact a real estate company that specializes in loss mitigation
If you are unable to make you mortgage payment and are in jeopardy of losing your home, contact a reputable loss mitigation company to help you by negotiating with your lender to resolve your situation.
Documents you will need
This is a list of documents that are generally required for a loan resolution package, although this list can vary depending on each unique situation:
- Hardship Letter – A letter that explains your unique situation as to why your cannot continue making your payments.
- Financial Statement – This shows where your money goes and how much is left over after paying your bills. A short sale real estate agent will provide the appropriate forms, which will itemize your finances and show your hardship.
- Bank Statements – Last two months of bank statements – checking, savings, etc.
- Mortgage Statements – For all loans associated with the property, you need to collect the most recent mortgage statement & account number.
- Pay stubs – Last two months of pay stubs, or proof of unemployment.
- Tax Returns – Last two years of tax returns including W2′s.
Once all of the required documents are obtained, the negotiations can proceed with your bank.
Where to go from here
- See if you qualify for a short sale.
- Get referred by an expert Vacaville real estate agent to an agent near you.
Related posts:
- Bankruptcy versus Foreclosure
- Important Info About Is it a Good Idea to Sell Your Home Yourself?
- Top Advice About Bankruptcy Or Foreclosure
- Baltimore Bankruptcy Lawyers Help You Avoid Costly Mistakes
- Free Tips About Home Selling Guide
Tags: avoiding foreclosure, Foreclosure, foreclosure avoidance, short sale, solano county, vacaville