7 ways to stop foreclosure fast

The worst has happened and your bank is threatening to foreclose on your house. What is your job? This is a difficult time and you may not be able to think of possible options. You may think that all hope is lost and that you will lose your home and ruin your credit. However, there are options to stop foreclosure and preserve your credit and possibly even your home.

1. Update the loan

Perhaps the best option, if you can do it, is simply to update the loan. That’s all the bank is really after, after all, since they want to keep receiving payments (and the interest on those payments) from you. If you bring the loan up to date, the bank will almost certainly stop foreclosure proceedings and your credit and home will be saved. This should be your first choice, if possible, especially if you live in the house and want to keep it your home.

2. Forbearance plans

A forbearance plan is designed to provide some short-term relief to borrowers who are experiencing financial difficulties that prevent them from paying their monthly mortgage payment. Under a forbearance agreement, the bank agrees to reduce or suspend your mortgage payments for a certain period of time to give you time to recover. For your part, you must agree to resume full payments at the end of the forbearance period, plus pay an additional amount to catch up on late payments (including interest, principal, taxes, and insurance). This can be an excellent option. if it is certain that your difficulty will be only temporary.

3. Sell your house to a cash buyer

If you know you need to get out of the house, you can often pay off your loan (plus have some money left over) by selling your house to a cash buyer. This could be a normal sale on the real estate market, or it could be a sale to one of the many companies that offer to pay cash for homes in danger of foreclosure. These companies can often seal the deal within a week of your contacting them, because they act quickly. Most of them will give you a cash offer within 24-48 hours and close the sale as quickly as possible (sometimes even on the courthouse steps on foreclosure day).

4. Dirty shorts

A short sale means that your bank agrees to accept less than the full amount owed to avoid foreclosure. This involves finding someone to buy your house for less than you owe and convincing your bank or lender to accept the amount you can get for the house. Note, however, that the phrase “short sale” does not mean that it will be done in a short period of time; the “short” in “short sale” means that you are going to be “short” of the amount you actually owe. You will need to plan for this well in advance to prevent your bank from foreclosing. This option is often better for your credit because it prevents foreclosure from appearing on your credit report.

5. Deed-in-lieu of foreclosure

A deed-in-lieu of foreclosure plan is also known as a mortgage release. This is where you, the owner, voluntarily assign ownership of your property to the lender/bank. This gets you out of the mortgage without foreclosure, and sometimes even gives you a relocation incentive to help you move to another home. Other options may allow you to stay in the home for up to three months rent-free, or lease the home from the lender for up to a year or more at current market rates. This can be a great option if you’re ready to move on but can’t sell it short, as it allows you to keep foreclosure off your credit report.

6. Loan Modification

If you modify the loan, you permanently restructure the mortgage so that the terms of the loan change to provide you with a more favorable payment plan. The lender may agree to lower your interest rate, convert the loan from a variable interest rate to a fixed interest rate, or extend the length of the loan. To be eligible for a loan modification, you will generally need to show that you are unable to make your current mortgage payment due to financial hardship and make new payments regularly during a trial period to show that you can, in fact. , make the new payment.

7. Bankruptcy

If you’re behind on your mortgage payment with no realistic way to catch up, sometimes bankruptcy can help. In bankruptcy, you are allowed to pay off the arrears (the missed and unpaid payments) on your mortgage over a period of time that could be up to five years. You will need to have enough income to pay your current mortgage payment, as well as the amount the court determines to pay your arrears. If you make all the required payments until the end of the payment plan, you can avoid foreclosure and keep your home.

Any of these options can help you avoid foreclosure, sometimes even allowing you to stay in your home. Foreclosure can be a nasty thing to have on your credit report, even worse than bankruptcy, and you want to avoid it at all costs. The most important thing is to talk to your bank/lender about your difficulties and try to work things out with them first. If you can’t find the best option, a loan modification, then you should start exploring other options.