Avoid Foreclosure

Don’t Let Foreclosure Ruin your Credit Records

Foreclosure. It’s a home owner’s nightmare. It may seem like you have reached the end of the road with your property, however here are a couple things to consider.

What happens if my property is foreclosed?  

As much as you wanted to keep your home, your lender can take over your property once foreclosed. And you, on the other hand, will have to move out. If the worth of your home is less than the total amount that you owe on your mortgage loan, there could be a deficiency judgement.  This could potentially make it difficult for you to qualify for a credit in the future.

What should you do? 

Take your lender’s letters seriously. If you think that you’re going to have a problem paying your monthly dues, it is best that you contact your lender’s Loss Mitigation Department as soon as possible. Before doing so, you need to prepare all the necessary information stating your current financial status and income. Be honest with them. You don’t have to be scared. They can help you reconstruct your mortgage according to your current financial ability.

Don’t abandon your home. Don’t ever consider abandoning your property. You will not be able to qualify for assistance if you leave your home.
Think about Short Sale in Arizona as an alternative

Are there other options?

Refinance. This is applicable if you haven’t missed any of your mortgage payments. You might want to resort to refinancing your loan so that your monthly dues become more feasible.  You have the option of requesting a lower interest rate and/or to prolong your payment terms.

Forbearance. If your financial struggles are just temporary, your lender might offer you a forbearance. This is a good option because your mortgage payments can be suspended by your lender for 6 months, giving you enough time to become stable again.

Reinstatement. This usually goes hand in hand with forbearance. Reinstatement means that you will pay for all the missed mortgages and all other fees in one lump sum.

Partial claim. Your lender might file for a partial claim. This means that the US Department of Housing and Urban Development will pay your lender. The amount should be enough to make your mortgage current. By doing so, a lien will be placed on your property until the promissory note is fully paid.

Short Sale. A condition wherein you will sell your property and the lender agrees to accept a smaller amount from the original amount owed. If you owe $200,000 and your home sells for around $150,000, the lender will accept the $150,000 and will release the lien.