There are a lot of people who are in debt and in foreclosure. You have many programs out there for people to get themselves out of debt. However, people tend to turn straight to bankruptcy many times because they feel like it’s more beneficial for them despite not having a plan. This is very true when it comes to foreclosure.
7 Ways to Avoid Foreclosure
1. If you are trying to avoid foreclosure, your first choice should always be a loan modification. If you have been in process of foreclosure for the at least three months, and have some sort of financial hardship, you can apply for a loan modification. You can get your principle lowered and/or your interest lowered. The fees to a loan modification are around $900 to $1000 you have to have a hardship and your property taxes are intact.
2. If you are a veteran, and have a VA loan, you can get your loan modified as well. You don’t have to get a bankruptcy as your first option. Since the VA can buy your loan, this gives you leverage to help you save your home.
3. I know that people are not too thrilled about a short sale, but sometimes this is the best method to take considering the variables. If you are not trying to get a modification or even file bankruptcy, this may be the option you have. People tend to use a short sale so they can move. If you have had a hardship, and cannot do anything or pay for a company to help you, your only resort may be to short sale to an investor.
4. If you have been in process of foreclosure for the past 90days, you could get what they call a deed in lieu of foreclosure, I know that people haven’t heard of this type of thing before but what you do is submit a full financial package and a copy of your list agreement. The only thing is that you don’t need to have any liens against your property. This process involves an investor taking over a deed and the lender will waive all judgments.
5. If you have a loan that is two or three months past due, you can request a payment plan to your lender. They will approve you based on your financial situation. Just like a loan modification, you will want to show that you can handle any payment adjustment.
6. Another alternative is getting forbearance for your FHA loan. If you have some sort of short term hardship and your loan has to be behind for at least a year. The way forbearance works is something that supplies a relief with a regular plan. If approved, you will be able to pay this repayment between 12 to 18 months.
7. The last option that you can take on is a partial claim. If your loan is between 120days and year behind, then you can turn that debt into a 2nd mortgage. You won’t have to make payments on the 2nd mortgage until you pay for the first mortgage. There is no interest behind it either.