Easy Ways to Stop and Avoid Foreclosure on Your Home

 

Home is a place that we look forward to reaching, by the end of the day, where we can spend time with our families, that protects us from freezing cold, wet rain and hot summers. Life without home is not easy. So, it’s very important to save our home. However, sometimes, life gets a bit difficult and you might face financial issues. These troubles could lead you to face your worst nightmare: foreclosure. Then, you might need to take a swift action against it, as it will not only ruin the credit rating but will also make finding another house a very hard job for you. Also, there are ways by which you might avoid this foreclosure. You can either apply for bankruptcy, file a lawsuit or apply for a loan modification.

When you get a mortgage for your home, you sign a contract, where you agree to pay the lender according to the mentioned terms. It’s very important to do your research and understand the terms properly. You need to be sure that you will be able to pay the money on time. If you, because of any reason stop paying, you breach the contract. Therefore, it gives the lender the authority to try to retrieve the landed money or even take home back. Foreclosure is basically the process where the lender repossesses the house. A delay of a few days won’t lead to foreclosure. Most of the institutions don’t mind giving a grace period of 15 days. However, there might be a late fee attached. If, however, you don’t pay your mortgage for more than 90 days, the process of foreclosure may start. Once initiated, the process takes somewhere between two to twelve months to actually start. Hence, it still gives you some time to find your way out.

Contractor mortgages are the professionals who know about all these complications and also the way outs and make your journey easier. A good contractor might be able to help you find the best lender for you. Getting the right lender based on the income and paying power of the client can avoid situations like foreclosure.

Unfortunately, if you have to face the foreclosure, the first thing you might want to do is to educate yourself about the situation you are going to face. There are different ways by which foreclosure is handled in different countries. Although, foreclosures are comparatively rare in the UK as it requires a court order and the lenders very rarely get the request granted by the court. There are various ways by which you can handle foreclosure on your home, such as

Filing For Bankruptcy

Filing for bankruptcy might be the best choice for you if the foreclosure on your home is in near future as in less than a week. The “Automatic Stay” will stop the sale immediately. Even if the bank files a motion to continue with the foreclosure, it will take at least a month or two for the process to start again. You will be left with plenty of time to search your alternatives. There will be few possibilities for you based on the type of bankruptcy you file. Restructuring your debts, creating a payment plan or selling your home to liquidate your assets are your main options. But, it will be best for you to consult a financial advisor before making this big decision.

Bringing the Loan Current

To bring your loan current, you need to pay the past due amount. Therefore, you inform your lender that you will be paying the default amount and also the extra fees. It is much more convenient and less cumbersome for the lender as well. However, most of the people who reach the verge of foreclosure do not have the money to bring their loan current.

Revise Your Loan

Revising the terms of your loan is another great option. If you are having trouble in paying monthly for the mortgage for your home, you can discuss modifying the terms of the loan. Your lender can help you with the modifications to the due amount, rate of interest or the duration to make the payment more manageable. However, your lender will go through some details about your paying capacity and your situation before deciding to approve any modification to your loan. They would like to know if the loan has been given to your primary residence as people stretch to their upper limits to save the house they live in. They would also like to know if there is any temporary financial hardship you are facing and there is a probability that you will overcome it. It would also be important for them to know if you have a steady income so you would be able to pay the modified mortgage payments. You should also check if you are eligible for HASP i.e Homeowner Affordability and Sustainability Plan by the Government. This scheme permits you to restructure your mortgage.

To Sell Your Property

Selling the property will always be anyone’s last option but if you don’t see yourself being able to repay the mortgage and the foreclosure seems unavoidable, this might be the right option for you. In real estate, there is a term used “short sale” which means that the property is being sold for less than the market price as the owner is in distress and is in urgent need of money. However, the lender plays a significant role here as you can’t send your property without your lender’s permission. It can lead to legal problems. A short sale of your property might be able to provide you with enough money so you can pay your lender. There is always a possibility that you don’t get your expected price making it the least preferred choice. There is a possibility that the property is not sold in the term time. In that case, the lender lowers the price of the property and explores the option.