6 Tips on How to Avoid Foreclosure
When you own your own home, one of the worst things you can hear is the word “foreclosure.” But if you’ve fallen behind on your mortgage payments, foreclosure is a very real possibility along with all of the negative consequences that come with it. The key to stopping foreclosure begins with understanding the process and what your available options are.
At Bill Buys Houses, we work with Minnesota homeowners every day to help them get out from under looming foreclosures. We’ve put together everything you need to know about how to avoid foreclosure and how we can help in this post. To learn more about contacting a cash home buyer, give us a call.
The Basics of Foreclosure
When a homeowner purchases their home through a lender, part of the loan agreement means that failure to pay could result in foreclosure. Once that happens, ownership of the property will revert to the lender.
Foreclosure typically does not occur right away. Instead, the homeowner usually has to miss a few payments. And generally speaking, most lenders are fairly willing to work with the defaulted borrowers to help them avoid foreclosure since this is the best possible outcome for both parties.
The first step in the foreclosure process is a missed mortgage payment. At this point, the lender will begin by notifying the borrower of the missed payment. After a couple of missed payments, the mortgage holder will issue a demand letter. After a borrower misses payments for 90 days, they will typically be notified that the lender has initiated the foreclosure process. Once this happens, borrowers usually have 30 days to work things out with the lender and reinstate their loan.
These are just some of the consequences of foreclosure:
● Severe and lasting credit damage
● Loss of home equity
● Inability to secure a future lone
● Inability to get a new home loan
● Difficulty renting your next home
Avoiding a Foreclosure
Once you’ve become late on your mortgage payments, you’ve still got options on the table up until the final stage of the foreclosure process begins. Here’s what you can do:
1. Work with your lender.
During the reinstatement period, your lender will offer you an opportunity to get back on track with your payments. Borrowers will typically need to pay interest as well as additional fees on their loan. Although most states legally require the lender to offer a reinstatement option for borrowers, lenders are usually willing to work with borrowers regardless.
2. Ask for a forbearance agreement.
If your financial circumstances make repaying your loan difficult, you may be able to enter into a forbearance plan with your lender. When you enter into a forbearance agreement, your lender can make temporary reduced payment arrangements for a limited time. Generally speaking, these arrangements are made on about a six-month period.
3. Work out a payment plan.
If getting caught up on your loan payments means having to pay a large chunk of change you can’t afford, you may be able to work out some sort of payment arrangement. Depending on your lender and your repayment needs, they can usually work out a payment schedule on a three-month, six-month, or even nine-month schedule.
4. Ask for a loan modification.
Sometimes, the key to getting back on track is a loan modification. Talk to your lender about the loan options available, since they may be able to refinance with a lower interest rate. Or the lender may be able to extend the terms of your loan, lowering your payments.
5. File for bankruptcy.
One way to get out from under a foreclosure is to file for Chapter 13 bankruptcy. However, bankruptcy should be seen as a last resort option since it won’t stop the foreclosure in and of itself and it will leave you with lasting credit issues. But if you’ve got extensive financial problems, bankruptcy can be the key to getting out from under your debt.
6. Sell your house for cash.
If you’ve decided it’s better for your needs to start fresh, it may be a better option to sell your house outright. A cash buyer can purchase your home via a short sale if your lender is amenable to the terms. Often, lenders will work with borrowers to help them get out from under the difference on the sale. And we’ll even purchase your home as is!
Call Bill Buys Houses for a Minnesota Cash Home Buyer Now
Are you facing foreclosure on your Minnesota home? Don’t wait until your credit is ruined or you’re faced with eviction to make a plan. If you’re ready to get out from under your payment, our cash home buyers at Bill Buys Houses can help. Our process is fast and simple, with most sales closing in about a week. To get the process started and get an offer on your home, give us a call at 651-270-9191 or connect with us online.