Facing foreclosure is one of the most difficult and scary events you can go through. When families fall behind and hit a point of financial struggle, their lender may start the process of legally repossessing their home. For most, the difficulty of financial struggle is nothing in comparison to the fear and embarrassment of losing their home to foreclosure. Fortunately, there are several different alternatives to foreclosure, and speaking to your lender or an attorney may help you identify a plan you qualify for, and that best fits your needs.
If your financial struggle is not to the severity where bankruptcy is being considered, you may want to consider a mortgage modification. Through this type of plan, lenders can do one of two things; extended the terms of their mortgage loan or refinance. Both options are designed to reduce the monthly payments owed and make them more affordable.
Depending on your financial situation, your lender may offer to set up a repayment plan for you. This temporary suspension or reduction in your mortgage payment is known as a special forbearance. This option is best for individuals whose financial struggle stems from a recent reduction in income or a family emergency or illness that has caused living expenses to increase.
If your financial struggle is too great for these plans to work, you may still be able to act on a pre-foreclosure sale. This option allows homeowners to avoid foreclosure through a short sale of their property. If your lender agrees to this option, you may be able to sell your home and settle with your lender for less than the mortgage loan. As a last resort before foreclosure, you may be able to give back your home. Even though you will still lose your home, your credit will not be as damaged as with a foreclosure.
As with any major financial issue, making a well-informed decision may require the help of an attorney. If you are looking for an alternative to foreclosure, speaking to an attorney may help identify which plan is right for you.