Imagine a scenario in which you fall behind on your mortgage payments. Now, imagine how you would feel if your lender takes the first step in foreclosing on your home.
Although you’re in a tricky spot, it’s not the end of the road. There are steps you can take to protect yourself and your home from foreclosure, thus allowing you to stay there for as long as you want.
Here are some of the strategies you should consider:
- Loan modification: With this, you contact your lender to discuss modifying the terms of your loan to make it more affordable in the future. For example, they may agree to add missed payments to the end of your term. Or maybe they temporarily reduce your interest rate to make your monthly payment better fit your budget. Remember, you won’t know if you qualify for a mortgage modification until you ask.
- Bankruptcy: One of the primary benefits of bankruptcy is the ability to stop the foreclosure process. Once the automatic stay takes effect, your lender must stop what they’re doing. However, this only buys you time. You still need to find a way to catch up on missed payments and make all future payments.
- Short sale: If you find that you owe more on your home than what it’s worth, you can discuss a short sale with your lender. They may allow you to sell your home for less than the balance owed, thus writing off the remaining amount due. It’s not preferable, as it means you have to move out of your house, but at least you’re able to avoid the foreclosure process and the long-term impact it can have on your finances.
These are not the only ways to protect against foreclosure, but they are three ideas you should learn more about should you find yourself in this position.
The last thing you want to do is throw your hands off and hope for a miracle. There are calculated steps you can take to save your home, catch up on missed payments and get your financial house back in order. Don’t stop short of that!
