Whether you got behind on your mortgage loan payments over time or due to a catastrophic event such as a job loss or medical emergency, your lender is knocking on your door for payment. In fact, your lender may already be threatening to foreclose on your home.
When you borrowed the money to buy your home, you gave your lender your home as collateral. Now, as you experience financial difficulties, your lender may consider taking that collateral to satisfy the loan. Fortunately, most lenders have no desire to own your home. Instead, they would prefer for you to keep paying. This means that it may be possible to keep your home.
What options do you have?
One of the following foreclosure alternatives may work, depending on your circumstances:
- Modifying your loan: You could discuss the possibility of modifying your mortgage loan with your lender. Refinancing may provide you with a more affordable payment. You may even be able to extend the length of your loan, which may also lower your payment.
- Requesting a forbearance: If you believe that your financial situation is temporary, your lender may agree to either suspend or reduce your payments for a specific amount of time. This may allow you the opportunity to get back on your feet before resuming your payments.
- Turning to the FHA-Insurance fund for help: You may qualify for a one-time payment to catch you up on any mortgage loan payments you missed.
If your goal is to get out from under your mortgage loan and not necessarily to keep your home, you may be able to work out one of the following arrangements with your lender:
- Selling your house before a foreclosure: You may be able to sell your home before your lender files foreclosure proceedings against you. With your lender's consent, you may even be able to accept an offer that is less than the amount you owe.
- Offering a deed-in-lieu of foreclosure: If selling your home isn't a viable option, your lender may agree to take possession of your house without the need for foreclosure proceedings. This does still affect your credit, but it looks better than a foreclosure on your credit report.
Before taking any of these steps, you may need to take an in-depth look at your financial situation in order to choose the best option possible.
How do you start?
Negotiating with your lender will more than likely take more than just a phone call. Even if you do get your lender to agree to one of the above options, documenting that agreement could be challenging. You want to make sure that your rights are protected and that no "fine print" somehow puts you in a worse position than you are already in at some point in the future.
Fortunately, as many other California residents have done, you can seek the advice and assistance of someone with substantial experience in this area to help increase your chances of getting through this successfully. In fact, a review of your circumstances may reveal another viable option that could help not just with your mortgage loan issue, but most of your financial issues -- bankruptcy.