Alternatives to Foreclosure

Alternatives to Foreclosure

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Foreclosure can happen to any homeowner when he/she has a hard time making monthly mortgage payments and is showing no signs of doing so anytime soon. Often the case with foreclosures is a bad credit score that hampers your chances of getting back on your feet as soon as possible.

In fact, once a home goes through the foreclosure process, the ex-owner will likely have difficulties in qualifying for mortgages, loan, or even landing a good job. While many people perceive bankruptcy to be one of the alternatives to foreclosure, which it is to an extent, it does more harm to your credit score than any good.

While bankruptcy does freeze the foreclosure process, regardless of what stage you’re in, the eventual decision will be decided in court whether or not you are liable to make payments. Going through a foreclosure can be one of the most difficult periods in life where you must decide whether you want to keep the home or dispose it off. Here are some alternatives that can help you ease the pain without leaving a huge blotch on your credit score.

Retaining Your Home

Repayment Plan – This is when you pay the lender the full amount due, including the fines. While difficult, this plan helps you bring your mortgage payments to current and protects your credit score.

Mortgage Modification – You can ask your lender to change the terms of the original mortgage in case you are able to make payments but don’t have enough to bring the mortgage to current. You may be able to get lower interest rates or an adjustable rate that makes repayment of the loan easier.

Refinance – Provided that you have adequate equity and healthy credit score, you may refinance the loan to achieve lower payments. Refinancing is a viable solution for those who purchased the home with good money in down payments.

Special Forbearance – This is when the homeowner pays a portion of the regular payment, or no payments in some cases, for a designated period of time based on the financial position. This gives the homeowner time to pay off bills, save money, find employment or better employment, and so on.

Rent Out – Renting out works for homeowners who have low mortgage payments that can be covered with monthly rent. If it works for you, you may keep the property while living elsewhere, but only after you have discussed it with your lender.

Disposing Off Your Home

Short Sale – This is when you owe more to the lender than the home’s worth, and don’t want to declare bankruptcy to protect your credit score. In such case, a short sale can help you keep foreclosure off the record, retain your credit score, and can buy a home again after 2 years. Remember that once your home has started the foreclosure process, you can still avail this option.

Deed in lieu of Foreclosure – Otherwise known as friendly foreclosure, in this alternative you will return the deed and the house to the bank rather than facing foreclosure. If the lender approves, then you’re saving them tens of thousands of dollars in foreclosure proceedings without tarnishing your credit score. With a deed in lieu of foreclosure, you can enter the home buying market at 4 years of sale.

Some Valuable Tips

  • When you receive the foreclosure notice, the worst thing you can possibly do is abandon your home, which will you eventually lose along with getting a bad credit score.
  • Always contact your nearest HUD approved housing counseling agency to learn more on how you can stop the foreclosure process and what alternatives are best in your situation.
  • It is advisable to consult with your lender regarding the foreclosure. Your lender may be willing and able to provide you with a flexible repayment/ refinance plan that makes it easy for you to sustain your home.

As a word of caution, beware of the scams that run in the name of foreclosure. When you get the notice, what happens is that your name and home address is published in the local and online news publications. In other words, it’s very easy for someone to take advantage of your situation for monetary gains. In case you come across any such scams, report them directly without hesitation because seeking assistance for foreclosure is free and will always be.

Give us a call today at 720.260.4461 or 587.800.1213 to let us know what YOU need help with! D Gees Homes & Realty has the experience, know-how, and infrastructure to offer you great opportunities in your real estate endeavors, whether you need to sell your house, a new rehab project to work on or would like to learn about other options.

Please call us today at 720.260.4461 or 587.800.1213 if you’d like to learn more about the real estate services that we offer.

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