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Thankfully, the foreclosure rate in the United States has dipped to 0.47 percent, having hit an all-time high of 2.23 percent in 2010.
But even then, foreclosure is a terrifying prospect for any homeowner. There fewer things that are as painful as losing a home you’ve worked so hard for. If you’ve kids, can you imagine the stress they will go through? Yet, one child in every classroom in the country is at risk of losing his or her home to foreclosure.
The good news?
You can prevent foreclosure, and in this article, we are telling you how to do exactly that.
1. Be Proactive
The first step to avoiding foreclosure is to address the situation long before it becomes a big problem.
You see, the only way to lose your home is by defaulting on your mortgage payments. In most instances, this doesn’t happen out of the blue.
You’ll typically start to see the warning signs of financial distress long before your lender sends you a notice of default. For example, if your business – which is your primary source of income – starts doing poorly, the likely consequence is you’ll default on your debts.
Once you notice that your income is uncertain, take action.
You could look for a job so that you have additional income. You could also arrange a meeting with your lender and let them know about your situation. Sure, you won’t get several months to get your finances in order, but you could get a month or two – which can make a big difference.
2. Refinance the Mortgage
Refinancing a mortgage is the process of taking out a new home loan to replace the old one.
However, refinancing is an ideal option when you have a good credit score and positive equity in the home (the difference between the value of the home and the amount you owe).
Refinancing can help you secure a new loan with a lower interest rate. Perhaps the reason you aren’t able to keep up with payments is your current mortgage charges exorbitant rates.
3. You Could Be Eligible for Special Assistance
Maybe you’re eligible for special assistance and you’re in the dark about it.
Depending on your specific circumstances, you could get your mortgage refinanced cheaply or even waived off. If you’re currently serving in the Armed Forces, for example, the Service Members Civil Relief Act offers your foreclosure protection.
4. Sell the Home for Cash
Sometimes trying to hold onto the home can worsen your financial situation.
This is why you should consider selling the home and using part of the money to pay off the mortgage. What’s more, you can quickly offload the property by reaching out to a local we buy houses company. They will likely buy the home as is, ensuring you don’t have to worry about making repairs.
5. Seek Personal Bankruptcy Protection
If selling the home doesn’t entice you or maybe no buyer is willing to meet your valuation, you can consider seeking bankruptcy protection.
However, filing for bankruptcy is a complicated process. There are two types of bankruptcy, Chapter 7 and Chapter 13, and they both offer different protections. And there is a possibility your application will be denied, especially if yours is a case of not enough money as opposed to no money at all.
Either way, it’s important to consult a bankruptcy attorney before proceeding.
You Can Avoid Foreclosure
When you’re facing foreclosure, it’s easy to feel helpless and hopeless.
Fortunately, there are steps you can take to delay or even stop the foreclosure process. Not all remedies fleshed out above will apply to you, but we’re certain at least one will suffice.
Keep tabs on our lifestyle section for more tips on homeownership.