Stop Foreclosure- Financial Circumstances to Consider
If you are facing the task of how to stop foreclosure, knowing some details about your existing financial status will determine what options you have. Two people who have completely opposite financial circumstances will have completely different options to choose from. Some financial circumstances and the resulting options are outlined below.
If You Can Resume Making Monthly Payments Now and Into the Future
If your current income allows you to continue making the monthly payments, but you are not able to make back payments you are in good shape. Below are your possibilities.
Negotiate with the lender to modify the loan into paying a little more each month or increase the term of the loan. Or you can search for a better loan with a different lender in order to refinance the old mortgage. However, try to improve on your current situation with a better interest rate. Lastly, you can bring the loan current by paying missed payments as soon as you can by using funds from family and friends, or liquidating some belongings, or find a second source of income. Then vow never to incur back payments in the future.
If You Have Money to Make Partial Payments
Bankruptcy can be a consideration in this circumstance. You would be asked to agree to a plan by the courts to pay your debts according t certain conditions. Bankruptcy may be a good choice for those who are in foreclosure proceedings and who have also accumulated a large number of debts.
It is a way that you can put your financial affairs into some kind of order and also keep your home. You should definitely see a lawyer if you are considering this option, and try to find one who specializes in bankruptcy. This can be done yourself if you research expert advice.
If Your Income Level Does Not Allow You to Pay Any Amount on a Monthly Basis
Typically, when you are facing long term grave financial circumstances it will not be possible to save the home. The faster you come to this realization the more positive the outcome will be. When you think about your situation in this way, then walking away from the home will be a positive step in vastly improving your overall financial picture when at one time you felt trapped.
For some people, there may be the option of renting out the house. This could work if the monthly rental will cover the loan payments. However, do not forget that you will have costs and there is also some risk - what if the tenant doesn't make the rental payments? You will also need to have the lender's permission before you do this.
If losing the house seems unavoidable, you should always try to sell it yourself rather than let the lender have it through foreclosure. Of course this may take a while but if you show the lender that you are doing this, they may agree to wait.
If the market value of the house is larger than the amount you owe on the mortgage, you can pocket some cash and come out of the ordeal with a decent credit rating as well. You could then apply for a new loan with the profit as a down payment and purchase a more affordable home.
If your house is worth less than your loan, you may still be able to settle the debt by selling it. You need to talk to your lender about whether they will accept a "short sale". This means that they take whatever you get for the house, and agree to write off the rest of your debt. This is better for them than foreclosure where they have high legal expenses.
The drawback to a short sale is that it will show up negatively on your credit report as a partial payment of the debt. Bad marks on your credit rating due to a short sale possibly can be avoided be hiring an attorney. However, a foreclosure will have a greater negative effect on your credit report.
There are many ways to avoid home foreclosure and they all have merits in different situations. So when you are looking at how to stop foreclosure, be sure to consider all of your options.
If You Can Resume Making Monthly Payments Now and Into the Future
If your current income allows you to continue making the monthly payments, but you are not able to make back payments you are in good shape. Below are your possibilities.
Negotiate with the lender to modify the loan into paying a little more each month or increase the term of the loan. Or you can search for a better loan with a different lender in order to refinance the old mortgage. However, try to improve on your current situation with a better interest rate. Lastly, you can bring the loan current by paying missed payments as soon as you can by using funds from family and friends, or liquidating some belongings, or find a second source of income. Then vow never to incur back payments in the future.
If You Have Money to Make Partial Payments
Bankruptcy can be a consideration in this circumstance. You would be asked to agree to a plan by the courts to pay your debts according t certain conditions. Bankruptcy may be a good choice for those who are in foreclosure proceedings and who have also accumulated a large number of debts.
It is a way that you can put your financial affairs into some kind of order and also keep your home. You should definitely see a lawyer if you are considering this option, and try to find one who specializes in bankruptcy. This can be done yourself if you research expert advice.
If Your Income Level Does Not Allow You to Pay Any Amount on a Monthly Basis
Typically, when you are facing long term grave financial circumstances it will not be possible to save the home. The faster you come to this realization the more positive the outcome will be. When you think about your situation in this way, then walking away from the home will be a positive step in vastly improving your overall financial picture when at one time you felt trapped.
For some people, there may be the option of renting out the house. This could work if the monthly rental will cover the loan payments. However, do not forget that you will have costs and there is also some risk - what if the tenant doesn't make the rental payments? You will also need to have the lender's permission before you do this.
If losing the house seems unavoidable, you should always try to sell it yourself rather than let the lender have it through foreclosure. Of course this may take a while but if you show the lender that you are doing this, they may agree to wait.
If the market value of the house is larger than the amount you owe on the mortgage, you can pocket some cash and come out of the ordeal with a decent credit rating as well. You could then apply for a new loan with the profit as a down payment and purchase a more affordable home.
If your house is worth less than your loan, you may still be able to settle the debt by selling it. You need to talk to your lender about whether they will accept a "short sale". This means that they take whatever you get for the house, and agree to write off the rest of your debt. This is better for them than foreclosure where they have high legal expenses.
The drawback to a short sale is that it will show up negatively on your credit report as a partial payment of the debt. Bad marks on your credit rating due to a short sale possibly can be avoided be hiring an attorney. However, a foreclosure will have a greater negative effect on your credit report.
There are many ways to avoid home foreclosure and they all have merits in different situations. So when you are looking at how to stop foreclosure, be sure to consider all of your options.
About the Author:
Visit "http://help-stop-foreclosure-now.com" for expert and effective options to prevent foreclosure. By researching you own reliable information you can find the stop forclosure help required to develop a plan to stop foreclosure fast.
posted by Credit Counseling at
5:30 AM
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