When Foreclosure is Looming
Foreclosure is a scary word to many homeowners. Few homeowners plan on ever having to go into foreclosure, and in many cases, they face sudden extenuating circumstances that force them to be unable to continue paying timely mortgage payments. In any case, homeowners looking to avoid or stop foreclosure seek the best possible options to get themselves out of the situation and onto the right track financially.
If the process of foreclosure is looming, the best way to avoid it is to prevent the filing of a Notice of Default. Lenders don’t want to foreclose, but if necessary, they will file a Notice of Default to protect their best interest. The second you know that you will not be able to meet your mortgage obligations, call your lender. Putting this off because of embarrassment will make the situation worse, however, if done in a timely manner, your lender may offer a few options to help you avoid foreclosure. The following list provides some examples of options a lender may give you.
• Time to make up your payments.
• Forgiving a payment.
• Spread out the missed payments over a longer term.
• Changing the terms of your loan.
• Add the back payments to your loan balance.
• Make a separate loan to you.
You will be given a certain time period to bring the payments current, pay the costs of filing the foreclosure, and stop the foreclosure. This is called reinstatement of your loan. If you cannot make up the missed payments and the lender will not work with you, here are a few other options to stop foreclosure.
Sell your home. If you choose to go this route, make sure you interview REALTORS® who have experience with pre-foreclosures. There are many Keller Williams agents who specialize in this. Ask them for their opinion of the market value of your home and find out what the average number of days on the market is for your area. Make sure that the agent you choose is able to market your house adequately to give it the best exposure possible.
Consider a short sale. A short sale happens when a homeowner in danger of foreclosure sells their property for less than what they owe on their mortgage. This can be a viable option for homeowners who have few financial options left. Although a short sale still affects credit, it can help you avoid bankruptcy and is a great alternative to foreclosure. It is important to consult your lender if you are considering this option. Additionally, hiring a lawyer, a tax professional, and your local Keller Williams short sale specialist is advised. Short sales are complex, and while it may cost you money to utilize these professional services, making a mistake during the short sale process could put you in even more financial trouble.