When you're faced with losing a home, it can feel scary and overwhelming. These 5 strategies may help you avoid foreclosure.
Going through a foreclosure is no small event. It takes a toll emotionally and financially, and you may feel like you have nowhere to go. While the number of foreclosures fell in 2018, there were still over 600,000 thousand U.S. properties with foreclosure filings.
If mortgage payments have been stacking up and you see a foreclosure in the near future, there are still steps you can take that may help avoid disaster, or at least delay it to give you more time to get your plans in order.
Your best bets are to:
- contact your lender
- declare bankruptcy
- look around for assistance solutions
- apply for a loan modification
- talk to an attorney
Try these five strategies to avoid or delay foreclosure on your home.
1. Contact your lender
You may think that banks and lenders are cutthroat institutions with little sympathy for people going through hard times. But the truth is, lenders, don't want to foreclose on your home any more than you want them to.
Try reaching out to your lender and being honest about your situation. Tell them that you'd like to avoid foreclosure, but you've been having trouble making payments. Lenders will often be able to help borrowers find a solution that works for both of them.
It's worth a try, so this should be one of your first steps if you see a foreclosure in the future. Don't ignore your problem and let the payments continue to build up — this could make it more likely that you'll lose your home.
2. Declare bankruptcy
Declaring bankruptcy can stop a foreclosure from happening or continuing if it is already in the works. When you file for bankruptcy, an “automatic stay” prohibits lenders from foreclosing on your home. This stops foreclosure proceedings, delaying them or even ending them permanently.
Make sure that you're filing Chapter 13 bankruptcy; otherwise, you may not be able to keep the home, even if the foreclosure is delayed. Chapter 7 bankruptcy will help delay foreclosure so you can figure out what to do next, but you may still lose your home when all is said and done.
3. Find an assistance solution
When you can no longer make mortgage payments, you may be able to find help before your home is foreclosed. The U.S. Department of Housing and Urban Development provides a list of approved housing counseling agencies by state, so you can search for assistance in Florida. There are also governmental solutions for seniors and veterans, so look into all available housing and mortgage assistance programs.
Some words of warning here: Don't fall prey to foreclosure prevention companies that ask for money for their services. Remember, you should be using everything you have to pay your mortgage, and there are plenty of resources out there that don't charge fees for these services.
Be very wary about companies or organizations that claim to offer help to avoid foreclosure. You should always ask an attorney for advice before choosing an assistance provider.
4. Apply for a loan modification
Another option that may stop foreclosure is applying for loan modification. You're essentially applying for loss mitigation, which means that you and your lender are working together to change the terms of the agreement and avoid foreclosure.
Loan modification is one type of loss mitigation and typically involves lowering the payment amount or altering the terms so you can still make your mortgage payments. This is a good option if you've only recently discovered that you're having trouble making monthly payments. If the application is approved, the foreclosure will be stopped. Just remember that you'll have to continue paying per the payment structure that's agreed to.
5. Talk to an attorney
Finally, an attorney will be a big help with this entire process. You can present your situation to an expert in Florida real estate law and work out the best plan to keep your home, or at least buy more time to find a solution.