You don’t have to live in fear of losing your home

Making a mortgage payment when you are struggling financially can be very difficult.  The thought of what will happen if you CAN’T make your mortgage payments and you lose your home, is also a difficult thing to live with on a daily basis.  Unfortunately, many American’s homes are in jeopardy as they fall deeper and deeper in to debt.  If you’re in this position and aren’t sure what solutions exist to help you save your home, we have some suggestions.

What Can Be Done to Save Your Home

There are more than a handful of things which can be done to try and save your home. Everything we suggest is going to require effort, sacrifice, and some knowledge on your part to be proactive in avoiding foreclosure.  Believe it or not, the bank doesn’t want your house. That being said, they also must work within certain parameters in terms of what options they have to offer to homeowners.  But in general, here are some options to consider:

Reinstatement – When you’re behind on your mortgage, you could consider contacting your mortgage company to negotiate a lump sum payment of your past due amount by a specific date.  Something like this generally works for people whose financial struggle is temporary and they have access to a lump sum of cash.

Repayment Plan – Again, the bank doesn’t want your home and they may be willing to work with you to come up with a repayment that would allow you to pay back the amount you are past due on, over time.  A repayment plan may be beneficial to someone who has only missed a few payments.

Forbearance – With forbearance your payments are suspended for a period of time.  When you resume payments, your loan is either extended for a longer amount of time or additional partial payments for the time you were in forbearance are added to your payment.

Loan Modification – In some cases, you can negotiate a loan modification with your mortgage company in which you agree to modify the terms of your loan.  Items you can negotiate for include reducing the interest rate, extending the term of the loan, or adding missed payments to the loan balance. A loan modification agreement may also allow you to reduce the amount of money you owe by forgiving, or cancelling, a portion of the mortgage debt.

Bankruptcy – In most cases, we can save your home with a Chapter 13 bankruptcy plan.

Be Proactive

If you are looking to do some type of loss mitigation, such as a repayment plan, loan modification, or forbearance agreement, the best way to work on that is to stay in close communication with your bank and be proactive, proactive, proactive. Attempt to find a contact at the lender whom you can speak with personally and come back to for further guidance and communication. Let the bank know what difficulties you are facing, whether those difficulties are short lived, and what you are looking to accomplish. Be honest with the bank and yourself. If they require you to complete a package of paperwork, do so as quickly and accurately as possible and make follow up phone calls to be sure that the package has been received. If you reach any agreement, be sure that you are provided with all terms of the agreement in writing.

Is your house worth saving?

If you are behind on your mortgage it is important to keep in mind that not every situation can be resolved by negotiating with your lender.  And in some cases, that might not even be the best option for you!  You should carefully evaluate all your options and pursue the solution that is going to work out best for you and your family.

As you are evaluating your circumstances, keep in mind is how much equity or negative equity you have in the home. Though there is often an emotional attachment to a home, if you are struggling financially, considering a sale may make more sense.

Selling to Avoid Foreclosure

Selling your home and using the proceeds of the sale may be an option to help you avoid foreclosure.   This option is typically a good fit if you can sell your home for more than your loan amount.   That said, if you decide to put the house on the market, be sure to communicate this with your lender.  They might postpone foreclosure proceedings if you have pending sales on your home.  Going this route not only helps avoid foreclosure but it will also help you avoid hurting your credit score.

What if I can’t sell my home for more than my loan amount?

If you’re willing to sell, but you owe more than the house is worth, it may not make sense to bring such a mortgage current.  It may take years to recover equity in the home. If this is the case, considering a short sale may be an option for you.

A short sale is when you sell your home for less than you owe on the mortgage.  You have to work with your lender to get a short sale approved.  With a short sale, the lender has to agree to accept the proceeds from the sale even though the amount may fall short of what you owe them.

Again, stay in constant contact with the lender, and be proactive. You won’t receive any proceeds from the sale, but the bank won’t take your home, and it may even have a lesser effect on your credit rating.

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