Have you received a letter from your lending institution telling you that you are in pre-foreclosure? This is a serious legal matter that can have major effects on your financial future for years to come. You must take the necessary steps to stop the foreclosure process, for further details: Enter here
Facing foreclosure and uncertain of where to turn or what to do? Keep reading to learn about alternatives and options to help stop foreclosure from taking your home.
1. Bankruptcy. Choosing between bankruptcy or foreclosure might not sound like a good place to begin, but depending upon your specific situation, there are actually advantages to selecting one above the other. Bankruptcy can negatively affect your credit score for up to ten years and limit your ability to obtain a new mortgage. It is also costly and time-consuming. The average cost of filing Chapter 13 bankruptcy is $3,000 to $4,000, while Chapter 7 typically runs between $500 to $2,500. On the other hand, filing for bankruptcy often provides a fresh financial start and allows you leave the negatives behind and can definitely help stop foreclosure.
2. Refinancing. Although most homeowners facing foreclosure won’t qualify for refinancing or other home equity loans for a variety of reasons, there are always a few that may be in better financial shape than they realize. For example, elderly homeowners with substantial equity in their home may be eligible for a reverse mortgage, or someone with a temporary situation may be able to refinance and dramatically lower monthly mortgage payments. Be sure to understand the full cost of refinancing a home, including extended payment plans, closing costs, and other fees frequently “wrapped’ into the loan. In many cases, the monthly payment might be lower, but the long-term cost of keeping the home could still be substantially more than the current value of the property. But refinancing is an option that will help stop foreclosure.
3. Short Sales. Short sales may be a win-win situation for both the current owner and prospective buyer. Short sales allow the property to be sold in a fraction of the time required by other alternatives and often allow the current owner to avoid bankruptcy or foreclosure entirely. Most people facing foreclosure are relieved to learn they still have options available.
Foreclosure might sound easy, but for millions of Americans who reside in states that allow lenders to sue for deficiency, it can become a financial nightmare. In these situations, the lender may be able to sue for the deficit or remaining balance owed on the mortgage. To add insult to injury, any amount forgiven by the lender may be subject to taxation. Be sure to understand the full cost of foreclosure when comparing alternatives to help stop foreclosure from taking your home.
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