There are many ways in which you can avoid a foreclosure. Your lender has various tools in their aresenal which can help to prevent foreclosure. You may or may not qualify for the forclosure prevention tools mentioned in this article, but you should try everything that you can in order to save your home.
Ask your servicer if they will agree to reduce or suspend your monthly payments for a specified period of time in order to avoid foreclosure. After the specified time, you can resume your regular payments and pay an additional amount each month to make up for the delinquency. This would probably be the easiest way to avoid foreclosure. However, not every situation can be resolved through your loan servicer’s foreclosure prevention programs, and you might not be able to keep your home or…. YOU might decide not to keep your home.
Find out if the servicer may be willing to change the terms of your mortgage (for example, by lowering the interest rate, converting an adjustable-rate mortgage to a fixed rate, or extending the repayment term) in order to reduce your monthly payments.
Inquire into whether or not the servicer offers a Repayment Plan. This is where your servicer gives you a fixed amount of time to repay the amount you are behind by adding a portion of what is past due to your regular payment. This option usually will help you to avoid foreclosure if you have only missed a few payments.
Check to see if there is a Reinstatement Plan: This is when you pay the loan servicer the entire past-due amount, plus any late fees or penalties, by a date you both agree to. This option may be helpful to avoid foreclosure if your financial problems are temporary, and you can show that you will be back on track by a certain time.
Find out if the lender can offer Forbearance: Forbearance is where your mortgage payments are reduced or suspended for a period you and your servicer agree with. At the end of that time, you resume making your regular payments as well as a lump sum payment or additional partial payments for a number of months to bring the loan current. Forbearance will only work if your income is reduced temporarily (for example, you are on disability leave from a job, and you expect to go back to your full time position shortly). Forbearance will not help to avoid foreclosure if you are in a home that you cannot afford.
The final option would be to check into a Loan Modification option: Here, you and your loan servicer agree to permanently change one or more of the terms of the mortgage contract to make your payments more manageable for you. Modifications can include lowering the interest rate, extending the term of the loan, or adding missed payments to the loan balance. A loan modification may be necessary if you are facing a long-term reduction in your income.
Ask about each and every one of these options and you just may be surprised with the answer. Make these inquiries as soon as you know that you are having financial difficulties, the faster you act the better your chances of saving your home. Think about all of the hard work that went into purchasing your home, and you will realize that you should put up a good fight in order to prevent foreclosure of your home.