Of late, the U.S. housing market has been quite unfavorable to the interests of homebuyers. One of the key symptoms of the unhealthy U.S. housing market is the surging rate of foreclosures. According to housing experts, mounting non-mortgage debt and stagnant wages are the key factors driving foreclosures. It may sound contrary but the process of foreclosing is taxing for your banker/lender, as well. Not only it is a time-consuming process involving a lot of paper work, but it also ends up incurring extra costs. Moreover, evicting someone from his property is as bad as getting evicted. The good thing is that most of the lenders out there realize this fact and hence are ready to offer a helping hand to avoid the foreclosure altogether.
If you are facing or anticipating a foreclosure in the near future, here is your survivor guide to take you out of your troubles. First of all, do not panic. You have to understand, financial setbacks happen to all of us, one time or the other. But it’s not the end of the world. So brace up yourself and get determined to deal with the situation smartly. Let’s start with the basics –
1. Take Expert Counseling
Revisit your mortgage contract and take a good look at the clauses relevant to the foreclosure process. You will surely find something helpful. Talk to your lender, verbalize your financial trouble, ask for help and figure out a payment plan that could avert the need of foreclosure. Even better; contact your local HUD office. HUD approved counselors are the best people to talk to when you feel you can’t save your finances from drowning in debt. Such counseling comes for free and can help you get know-how of foreclosure-avoidance programs.
2. Get Your Loan Reinstated
The best way to avoid foreclosure is to somehow arrange the funds and make the outstanding mortgage payments along with the applicable fees and charges. Once you do, the bank will reinstate your loan and withdraw the foreclosure process. But reinstatement doesn’t work if you exceed the reinstatement period, getting too late to catch up with your outstanding payments.
3. Line Up Your Assets
It might sound obvious, but selling your possessions might cash you out of a possible foreclosure. Line up all your saleable assets. Even if you’ve run out of your own assets, there are always family members and loved ones to lend you a helping hand. You just have to look around and ask for help. Ask yourself. Can the collective price of your assets make up the money you need to keep your property? If yes, go ahead. After all home is the most treasured possession of all. It’s all worth to save it! Moreover, assets are something that you can always get back once your financial situation is stabilized.
4. Get Your Loan Modified
For those homeowners who couldn’t keep up with their mortgage payments, loan modification can be your ticket out. Simply put, it consists of an agreement between you and your lender, whereby the later changes a few terms on your mortgage plan in a way that either it brings down the mortgage rate or extends the loan term, thus making the mortgage plan to go easy on your pocket. One of such programs is Home Affordable Modification Program (HAMP) that allows you to switch to a lower rate on your current loan. Other such loan modification programs are Home Affordable Modification Program (HAMP) and Making Home Affordable (MHA) Program.
6. Get Your Loan Refinanced
Unlike loan modification, refinancing consists of replacing your current mortgage loan by a new plan. The new plan is completely different from the older plan in terms of loan term, monthly payments and interest rates.
7. Request Forbearance on Your Plan
Financial troubles come uninvited. But if you know yours is not going to last long, then a good option is to avail the forbearance feature. Simply put, forbearance is wherein the lender allows the borrower to suspend paying up to a certain period. The lender offers forbearance if the borrower can convince him that he’ll get back to his financial health after the specified period and start making the mortgage payments again. A smart way to convince the lender is to present funds from a refund, maturing financial investment or upcoming bonus.
8. Mortgage Insurance
In case, you have your property insured under Private Mortgage Insurance (PMI), you can request your banker/lender to make a claim on your insurer. If everything goes right, the claim amount released by your insurer might save you from a foreclosure. If nothing else works, it surely does!
A Word of Advice
We agree that standing on the verge of foreclosing your property can be a traumatic experience for anyone. Needless to say, such homeowners become vulnerable and at times, end up getting victimized by foreclosure scams. But these are the testing times and as a homeowner, you need to be more alert than ever while stuck in a foreclosure situation. This is definitely not a call to get tempted to resort to any too-good-to-believe offers. When you are considering your foreclosure-avoidance options, always work with a trustable and experienced real estate professional who can understand your situation well enough and offers you appropriate legal and financial advice.