If you are having trouble keeping up with your home mortgage payments, you may be scared that you will lose your house. If you fall too far behind on your payments, you may default on your loan. Banks and other mortgage lenders can repossess your home if you default on your home loan. If you do not make the proper payments and you default on your loan, you risk losing your home to foreclosure.
Foreclosure means the lender of your loan will take back ownership of your home and sell it to recover the money you didn’t pay back. If your home goes into foreclosure, you will have to move out. You will not receive any money from the sale of your home, and your credit score will be severely damaged. If the bank doesn’t recover enough money by selling your home to cover the existing loan, you may be help responsible for paying back the difference. By avoiding foreclosure, you can protect your credit score from getting worse. You can also prevent having to repay your loan despite having lost your house.
There are many Ways to avoid foreclosure. Some government programs focus on rehabilitating home loans and offering lower, more manageable payments. Others may offer alternate ways to sell you home and repay your lender. It is important to avoid foreclosure to protect your rights as a homeowner. Many people have saved their homes or credit by learning how to prevent foreclosure.
- Some government programs will give you the chance to refinance your home loan so that monthly payments will be more affordable. The Home Affordable Refinance Program, Principal Reduction Alternative, Home Affordable Modification Program and the Second Lien Modification Program all offer opportunities to change the terms of your loan or refinance.
If you are unemployed and having difficulty making your home loan payments on time, there are special programs in place for you. The Emergency Homeowners’ Loan Program, Forbearance for Unemployed Homeowners from the FHA and the Home Affordable Unemployment Program can all give you a temporary reduction in payments or delay your payments for a period of time. This will allow you to find employment and improve your financial situation without worrying that you will lose your home.
- Choosing a short sale is the best way to avoid foreclosure if you can’t refinance your loan, if you owe more than your home is worth, if you do not see your financial situation improving, or if you cannot sell your home for enough money to repay your mortgage. In a short sale, the bank or lender will accept whatever the home is sold for as full repayment for the loan. When you sell house cash goes directly to your lender, and you will not receive any of it. In return, you will not be held responsible for any remaining balance on the loan. While you will lose your home and your credit score will suffer, this is a much better alternative to foreclosure. It shows lenders that you are making an effort and reduces any penalties you may receive.
If you are risking going into foreclosure, you may not know where to turn. There are varying programs and option available to prevent foreclosure. While you don’t want to lose your home, sometimes short sales are the best way repay lenders and avoid foreclosure. Speak with your bank or lender today about options available to you!