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5 Ways Homeowners can Avoid Foreclosure and Rebound
5 Ways Homeowners can Avoid Foreclosure and Rebound
Owning a home comes with the responsibility of not only maintenance, but a financial obligation to pay a mortgage. As life happens, individuals may be presented with challenges and financial stress that can result in missing a payment. If several payments have been missed without contact with the homeowner's leasing company, a foreclosure might be presented by the lender. Although this is one possible outcome of falling behind on mortgage payments, there are several ways to avoid the foreclosure process even if a homeowner cannot afford the debt. The expert realtors at Choice Properties have listed 5 ways homeowners can avoid foreclosure, and rebound out of the rut.
Foreclosure Workout
During the time between the foreclosure announcement and the house auction, lenders are encouraging a compromise rather than proceeding with the auction. Lenders want to see homeowners stay on the right track, and are willing to negotiate a mortgage payment suitable for the current lifestyle.
Short Sale
Following the Notice of Default filed by the lender, but before the auction, there is a time where new potential buyers could make an offer on the house. If an offer is made on the house, lenders have the ability to consider accepting or declining the offer. If the homeowner presents a reasonable short sale offer, the lender may see this as saving them the time and effort of finding a qualified buyer in a soft market.
Bankruptcy
The only option to immediately stop foreclosure is to file for bankruptcy. Once bankruptcy has been filed, federal law prohibits any debt collectors from continuing collection activities, including foreclosure. This means the homeowner will face the creditors in court, buying the homeowner more time to recover financially. This law requires mortgage companies to work in-hand with homeowners, compromising to find the right solution.
Deed in Lieu
In this step of the foreclosure process, homeowners voluntarily sign the deed of the home over to the bank. Although this option sounds easy, it can significantly impact a homeowner's credit score. Lender's can be reluctant to sign over the home, as they fear homeowners are manipulating the system and being dishonest about their financial stress. This makes it difficult for lenders to agree to a deed in lieu.
Assumption/Lease-Option
Most loans in today's world are no longer assumable, meaning the average mortgage contains a clause where the borrower agrees to pay off the loan entirely. If a homeowner is facing foreclosure, they may have the advantage of persuading their lender to modify the loan. This allows another buyer to assume the loan, making it a win-win for all parties.
Consider taking action to avoid home foreclosure, rather than ignoring the situation. There are multiple ways homeowners can steer clear of a completed foreclosure, all of which are easy to navigate.
Choice Properties understands your needs and desires when it comes to the home search. We are here to help you define what you want, seek the best property and move forward feeling educated and able to make good decisions throughout the process. You can trust us to help you navigate it with the best real estate agents working for you. Call us to get started on your dream home search today.