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Published On: Thu, Sep 25th, 2014

How to Protect Yourself from Foreclosure

For the first time in the last four years, home foreclosures are on the rise. In August of this year, roughly 52,000 homes were foreclosed. That is a 1% increase from the previous year. Though the increase is slight, it’s something that homeowners need to be aware of so that they can protect themselves accordingly. Before closing on a house, make sure you have fully discussed the mortgage options with your real estate agent and mortgage broker so that you don’t get yourself involved in a loan you can’t pay off.

photo: TaxRebate.org.uk

photo: TaxRebate.org.uk

How to Limit Your Risk of Foreclosure

Most people will be confronted with financial troubles at some point in life. Fortunately, there are some things you can do to help protect yourself from potential foreclosure. Be sure to call your mortgage company at the first sign of financial difficulty. Lenders want to prevent foreclosure as much as you do, and they are often willing to work with you to find an appropriate payment plan. Additionally, call a housing counseling agency for help. There are many non-profit housing counselors available. They can provide you guidance and answer any questions that you have about your mortgage terms. If you are experiencing difficulty paying your loan, there are four main options available to you.
• Loan modification: Mortgage companies are often willing to modify your loan, meaning they will alter the existing terms of your loan into terms that are more affordable.

Forbearance: Your mortgage company may be willing to temporarily postpone your loan until you get your finances in order. However, keep in mind that your monthly payments may increase once your repayment plan is reinstated.

• Repayment plan: A repayment plan is an increased payment plan that will help you catch up on the payments you missed. This will allow you to gradually pay back the money you missed, rather than having to pay it all in one lump sum.

• Reinstatement: An alternative to a repayment plan is reinstatement. This is where you repay the missed payments in one lump sum, rather than through a gradual payment plan.

In times where foreclosure is inevitable, there are some options that will help to lessen the burden.
• Short payoff: In the event you have to sell your home, ask your mortgage company about a short payoff. If the cost of your home is only slightly below the remainder of your mortgage, your mortgage company may be willing to write off the money that exceeds the value of your home.

• Assumption: This will allow another buyer to take over the terms of your mortgage for you, allowing you to sell your house easily without foreclosing. Even if you have a non-assumable mortgage, your mortgage company may be willing to make an exception.

• Deed-in-lieu of foreclosure: This is where you can cancel the terms of your mortgage by transferring your property title over to your mortgage company. Most mortgage companies will only be willing to consider this as an option if you have already spent at least 90 days attempting to sell your home.

Guest Author: Lolita Di

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