Mortgage Foreclosure Know Your Options to Mortgage Foreclosure
You worked hard to own your own home, and you should not give it up without a fight! Being behind on payments automatically puts you on a slippery slope to foreclosure – unless you know your rights and know what you need to do to qualify for help.
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What You Can Do Modify Your Loan
If you’ve fallen behind on payments, a loan modification can lower your payments to a more affordable amount, either by lowering your principal balance and/or interest rate, changing the terms, or all of the above. You can do this yourself, or through HAMP, the Obama Loan Modification program – but beware, your lender will do everything they legally can do to avoid any modification. Lenders decline over 90% off all mortgage modification requests.They can decline applications and not tell you why, because unbeknownst to many, it is often times more profitable for your lender to foreclosure than to work with you.
Refinance with or without HARP
HARP is considered a hardship program and can only be used if you are not behind on payments. You can refinance to get a lower rate or better terms if you know that you will face foreclosure eventually provided nothing is done. If you’re upside down on your mortgage equity, HARP is a government program that will help you refinance. HARP is only for mortgages owned or guaranteed by Fannie Mae or Freddie Mac. Refinancing is the best option if you qualify, as it has no effect on your credit score. This is a perfect program for those who want to head off future financial problems concerning their mortgage.
Get a Short-Term Payment Reduction through Forbearance
If your financial difficulties are short-term and you know your income will return to normal within a specific timeframe, forbearance is an option your lender may offer. This allows you to reduce your payment amount for a period of time. You will still owe the difference and any past due amounts, and that amount plus interest is due after your income is back to normal. The forbearance amount may be paid all at once, over several months, or added to the end of your loan. This often results in having higher payments, and possibly higher interest over the remaining term of your loan, and it’s a negative on your credit report. Forbearance is usually a much better deal for your lender than it is for you. Mortgage Audit Corp’s 40-page mortgage analysis will detail all options and qualifications for permanent solutions and savings; outlining all government and non government programs alike.
Do a Short Sale
If you’ve had extreme financial hardship, doing a short sale and getting out of your home and mortgage debt may be your best option. The government program HAFA is available to help you including relocation expenses – but it’s important to make sure this really is your best option. Your lender will most likely not cooperate with you during this program because it is a substantial financial loss for the bank. They stand to make more money if they can legally foreclosure on your property.
File for Bankruptcy
This may seem drastic, but filing for bankruptcy will immediately stop foreclosures, penalties, fees, and harassing letters and phone calls. It can resolve all your debt issues, not just your mortgage foreclosure. What most people don’t know is that it may be difficult to afford your payments through the bankruptcy and if this happens then you may lose your home anyway. Bankruptcies can be an expensive repayment plan, so it’s best to be considered carefully.