So you are facing the unfortunate circumstance of going through a foreclosure, but you are not sure what’s the best way to prevent foreclosure.
Before we go any further, you need to understand that you are not alone. According to ATTOM Data Solutions, in 2019, the U.S foreclosure market reported 55,197 properties with foreclosure filings.
The first and one of the most important steps in the process is contacting your lender.
Lenders are in the business of making money, not taking homes. So they are willing to help you find a solution that’s a win for both parties.
With that said, let’s dive into some of the best foreclosure delay tactics.
Mortgage Loan Modification
When the terms of the loan are modified to help the homeowner keep their home.
Common modifications are lowering the interest rate and extending the life of the loan.
A short sale is a process where a lender accepts an offer for a home that is less than the principal balance.
For example, if you owe $100,000 on your mortgage, but your lender accepts a sale price of $85,000. Keep in mind that all short sales must be approved by the lender.
Deed in Lieu of foreclosure
When a homeowner signs a legal document transferring ownership of the property to the lender in exchange for being relieved of the mortgage debt.
When you are making reduced or no payments to the lender for a period of time. When the forbearance period ends typically, you will pay back what you missed or, the loan will be modified.
When a lender advances funds to a homeowner in the amount necessary to reinstate a delinquent loan.
However, the money advanced should not exceed the equivalent of twelve months of mortgage payments.
Challenge the foreclosure in court
If you believe you have a valid argument against a pending foreclosure, you can take the fight to your lender in court. You can file an answer in a judicial foreclosure or file your own suit to fight a non-judicial foreclosure.
File for bankruptcy
You can use chapter 7 bankruptcy to save your home if you are current on your payments. If not, it will only delay the process.
Chapter 13 bankruptcy will be a better option if your goal is to keep the home. You will be able to pay your delinquent balance over the span of three to five years.
Sell to a 3rd party
If you are going through the option period and you’re running out of viable options. Selling your home through a realtor on the Mulitple listing service (MLS) can be great.
However, what if your home isn’t in tip-top shape, rough around the edges, or needs major improvements before going on the market.
You can try selling directly to an investor it might work for you.
This option isn’t for everyone and not all situations, but it can work given your circumstances.
If you’re on the fence on whether working with an investor might be a good choice.
Check out these two articles for insight into the pros and cons of selling your home to an investor.