When your financial situation changes, one of the first things you might worry about is your home. Mortgage payments might account for a significant percentage of your outgoing costs, which means it may no longer be feasible to pay the total amount each month.
This can result in late payments or non-payment and, eventually, the threat of foreclosure looming over your head. This can be a scary thought, particularly as you may not be aware of your options or whether it’s even possible to avoid foreclosure. Fortunately, it might be if you choose to do one of the following things:
Sell Your House
For many people, selling a house before the bank claims it is one of the best options for them. You can liquidate your asset, pay back your lender, and start again.
However, as it can traditionally take a number of weeks to sell your home on the public market, you may like to consider a faster, easier, and more stress-free option like selling to a professional buyer.
They can generally provide an offer in 24 hours, with money in your bank account in as little as a week. This can be a much more practical option than going through foreclosure.
Look at Reinstatement
Reinstatement means that you can talk to your bank about keeping your home by paying what you owe in a lump-sum payment. This option may also include penalty charges and interest and generally has a due date.
This option may suit someone who can free up funds by selling other assets or receiving financial help from friends and family.
Ask Your Lender About Short Refinancing
Many lenders offer their borrowers the option of short refinancing when they’ve defaulted on their mortgage repayments. This involves them forgiving a part of your debt and refinancing the rest of it on a new loan.
Typically, short refinancing is more cost-effective for a lender than going through the foreclosure process, even though both methods cost them money.
Request a Mortgage Modification
Some people find themselves in temporary financial strife, such as if they’re waiting to begin a new job or have encountered an unexpected and urgent bill. If you can prove to your lender that your financial problems are temporary, they may approve a request for a loan modification.
A loan modification allows you to refinance or extend your loan to make your monthly repayments more manageable. You may then decide to adjust your repayments once you’re in a more financially sound position.
Discuss a Deed in Lieu of Foreclosure
If you aren’t able to sell your house quickly and believe you have exhausted all other options, you may like to discuss a deed in lieu of foreclosure with your lender. The lender takes your property and releases you of all mortgage obligations.
Unlike foreclosure, where you may still be left owing money to your lender, this option allows you to be relieved of all loan burdens.
If your financial position has changed and you’re worried about your ability to service a mortgage, you may be relieved to know you have choices. Look at your sales options and talk to your lender about how they might be able to help.