Dealing with financial difficulties can be worrisome, and ignoring them isn’t beneficial. Essential bills, like your rent or mortgage, should always be a top priority on your to-do list. However, there are times when you might struggle to fund these critical expenses.
Defaulting on your mortgage can lead to losing your home. If your home’s at risk of being foreclosed, here is a list of things you can do to try to prevent a burdensome scenario.
Hire a Foreclosure Attorney
Lenders are required to follow certain procedures when foreclosing a property. If they fail to do so, their attempt at foreclosure may not be valid, which could give you an opportunity to save your property.
With help from a Riverside foreclosure attorney, you can determine whether you have any legal recourse against your lender. If so, your legal team could argue that the foreclosure should be set aside.
Repayment Plans and Payment Forgiveness
The foreclosure process typically takes a few months, so it may not be too late to come to an agreement with your lender. Payment forgiveness effectively means that the lender cancels some or all of your outstanding debt.
This could mean that you’re no longer behind on your mortgage payments, thus negating the need for foreclosure. Alternatively, the lender could agree to a repayment plan, which would allow you to repay the outstanding debt in a realistic timeframe and keep your home.
Adjust Your Loan
Modifying the terms of your mortgage loan could be an effective way to deal with a potential foreclosure. If you’re seeking legal advice, talking to your creditor about altering your interest rate, extending the term of your mortgage, or switching to a different type of loan could enable you to retain ownership of your property.
If you’re able to resume making payments under the new loan terms, it’s likely that the lender will pause the foreclosure process, which means you will be able to remain in your home.
Consider Selling Your Home or Agree to a Short Sale
Selling your home could be a viable way to deal with the threat of foreclosure. If you have enough equity in the property to repay the mortgage loan, this will limit the subsequent damage to your credit and allow you to walk away without foreclosure actually taking place.
However, if the equity in your property doesn’t cover the outstanding mortgage amount, this is known as a short sale. In some states, the difference between the sale price and the amount owed must be forgiven by the lender, although any creditor in the U.S. can do this voluntarily.
Even if you are still liable to repay the outstanding amount, the financial implications of a short sale can be lesser than those associated with foreclosure.
Repair Your Credit
If you’re facing foreclosure, it’s highly likely that you have other debts to deal with too. This, combined with the effect foreclosure has on your credit score, can make it hard to borrow funds in the future. However, it is possible to repair your credit, even after foreclosure.
Defaults, bankruptcies, and foreclosures typically remain on your credit file for a period of seven years. During this time, you may be eligible for some types of borrowing.
By paying your debts off, making regular payments on outstanding debts, and paying your debt on time, you can improve your credit score over time.
Look for another place to live
Although you’ll want to do everything you can to keep your home, the threat of foreclosure means there’s a very real risk you’ll lose your property. Finding somewhere else to live should form part of your contingency plan and will give you peace of mind.
The damage to your credit rating will make it difficult to secure additional loans or another mortgage soon after foreclosure, so this probably isn’t a viable option. However, you may be able to enter into a rental contract with a landlord.
Having a family member or close friend act as a guarantor can make you a more attractive tenant to potential landlords, so ask those close to you to see if anyone is willing to assist you.
Dealing with Debts and Foreclosure
Money worries and persistent debt can have a catastrophic effect on your financial situation, but the impact doesn’t stop there. Many people experience emotional and physical stress due to ongoing financial issues, so it’s important to prioritize your health and well-being as you attempt to resolve the situation.
By accessing specialist advice and representation, you can give yourself the best chance of keeping your home and increase the likelihood of retaining your property.