Avoid Foreclosure with These Alternatives Part 1
Owning a home is a dream come true that offers many rewards. However, assuming a mortgage payment is a risk. If you fail to meet your monthly obligations and fall behind in payments, you place yourself (and family) at risk of foreclosure. The loss of your home can adversely affect your future credit and wreak havoc in your personal life. Read part one and two of this article to learn about the five alternatives to foreclosure.
Warning Signs of Foreclosure
Sometimes financial issues are foreseeable, while others are unexpected. A few warning signs that you are headed for a foreclosure include:
- Failing to pay your bills on time
- Maxing out credit cards (and only paying minimum payments on those cards)
- Having trouble choosing which bills to pay (basically robbing Peter to pay Paul)
Got a Notice? Be Proactive!
Receiving a Notice of Intent to Foreclose is one of the most traumatic things a person can go through. It’s important to recognize the early warning signs of financial trouble and reach out for help. If you think a foreclosure is on the horizon, act fast. The earlier you communicate with your lender, the better. Speaking with your lender will help you determine your options for avoiding a foreclosure, which may include refinancing, modifying the loan, a short sale, a forbearance, or seeking out the assistance of a home investor that pays cash for homes in Baltimore, MD.
In the face of a foreclosure, you may be able to refinance the home. This transaction allows you to pay off the current loan with the new loan. A lowered interest rate (the new loan) may even reduce your monthly payments. However, this depends on what type of home loan you have, your credit score, and the status of your mortgage.
Although you may be behind on your payments and cannot bring your account current, you may be able to get your lender to change the terms of your original loan. This is known as loan modification. A modification to your loan could entail lowering your interest rate, adding missed payments to the end of your loan, or extending the total years of the loan. This will absorb the delinquent payments and make your new payments more affordable. It may be difficult to qualify for a loan modification if you have too much debt. The process can be intense and not as beneficial as you may think.