Nobody enters into the purchase of a home expecting that they will have trouble meeting their mortgage obligations. However, sometimes life overtakes us with a series of unfortunate events, whether it's a job loss, illness, divorce or any other number of incidents that undermine our financial security.
Falling behind on your mortgage payments for several months can put your homeownership in jeopardy, leading to a foreclosure process that could result in the loss of your home. Fortunately, there are several strategies that can be employed to stop the foreclosure process. Some can be accomplished on your own, and others with the help of an experienced attorney.
Strategies to avoid foreclosure
You can stop the foreclosure process in a number of ways:
Work out a plan with your lender. The earlier in the process you know that you are going to have difficulties making your house payments, the more options your lender may be able to provide you with. Some of those options may include a loan modification, an alternative repayment plan, a reinstatement plan, or forbearance. The key is to open up a dialog early to avoid a situation becoming adversarial.
Get government help. The U.S. government also offers homeowners options to help stop foreclosure. The Making Home Affordable program offers buyers the option of either refinancing their existing loan or obtaining a loan modification. The borrower must qualify under the guidelines and their lender must participate in the program.
File for bankruptcy. You can delay a foreclosure process in progress by filing for bankruptcy. When you file, you automatically stop all debt collection activities. This may give you more time to negotiate with the lender or give you enough time to catch up on your loan payments.
Give your deed to the lender. A deed-in-lieu of foreclosure transfers the title and cancels the mortgage debt. You'll lose the house but will avoid the negative credit consequences of a foreclosure.
Sell the home. If your home has increased in value, you can sell the home, pay off your debt to the lender and pocket the remaining proceeds. If the home is worth less than the loan amount, the lender may accept a short sale to satisfy the debt.
The Hixson Law Firm serves clients in Mansfield, Arlington, Grand Prairie and other nearby Texas communities.