Options for homeowners facing foreclosure

There are several options for homeowners when facing a foreclosure. Some options may work better than others depending on the homeowner’s financial position, but each foreclosure option should be explored. It is no doubt that understanding your options when facing a foreclosure dramatically increases your chance of keeping your home.

What are your foreclosure options?

1) Seek professional help from a loss mitigation company

There are many loss mitigation companies offering programs that can help homeowners whom are unable to fulfill their mortgage payments and defaulting their way into a foreclosure. Loss mitigation programs are helpful because they are designed to mesh each unique homeowner to a lenders unique policy.

2) Mortgage loan modification is a popular foreclosure option

A modified loan will help a homeowner achieve a long term and sustainable mortgage.

3) Sell your Property – Short Sale Program

If you have equity in your home, you can sell the property and move into one that is more affordable for you. Contact a realtor and list your home. Generally you will sell your home quickly by offering it less than the average market value. It contrast, it will take you longer to sell your home if you offer top dollar amount. This will make you more susceptible to foreclosure.

If you have no equity, then a Short Sale program will allow you to sell the property at fair market value and the bank will generally accept a short payoff.

4) Refinance your property

If your monthly mortgage payment is costly, you may manage your cash-flow dilemma by refinancing your debt at a lower interest rate. If you’ve developed equity in your property, banks and investors may lend a lump sum to homeowners in foreclosure. The loan is then reinstated such that the homeowner would not have to make a payment for a year, which should be sufficient to get homeowners back on their feet.

5) Forbearance plans

Another foreclosure option is forbearance plans. These plans may offer provisional deferment or reduction of your monthly mortgage payments. The qualifications of these plans are based on financial hardship.

6) Deed in Lieu

If facing foreclosure, you may be able to offer your property to the lender. This way you don’t have to suffer a damaging loss to your credit report. Mortgage lenders are currently offering up to $5000 ‘cash-for-keys’ program for home foreclosures left in like new conditions.

7) Get a loan by borrowing from friends and family

One possible foreclosure option is to resort to a family member or friend in financial need. This may be the quickest and easiest way to financial relief. Explain your situation to your friends and family and ask if they would be willing to loan you money. Set terms and signing a contract as if it were a loan. Although it is up to your friend or family member to set these terms, be proactive to let them know you’re serious about paying them back and that you’re in financial need. Talk about loan amount, interest rate, loan period, payment period, and collateral. I’m sure your friends or family will be lenient about some of these terms, but you never know. With these terms solidified and signed, you will have financial relief through means of a loan and not a gift for tax purposes.