The economic downturn may impact your employment situation, affecting your ability to make mortgage payments.
Serious illness or injury and mounting medical bills may also cause mortgage payment problems. Here are four ways to help keep your lender from foreclosing on your home.
1. Consider loan modification
First, you can ask your lender for a loan modification. By law, your lender cannot proceed with the foreclosure when a loan modification review is underway. Hardship is usually the reason for this kind of request. Your lender could make your loan more affordable by lowering the payment, the rate or the loan amount. Your attorney can also work with the lender on your behalf.
2. File for bankruptcy
If you have mounting debt, you could file for Chapter 7 or Chapter 13 bankruptcy. Filing stops the foreclosure process immediately. If you qualify for the former, you can discharge your debts. With the latter, you can restructure your debts and establish a payment plan, which will include your mortgage.
3. Request a deed
You might consider requesting a deed in lieu of foreclosure. This means you would sign the deed to your property over to the lender. However, your lender may be reluctant to grant this, sensing there is too much legal risk involved.
4. Short sale your home
If you know your hardship will continue long-term and you owe more than your home is worth, you could approach your lender about a short sale. In this situation, your lender must agree to take less than the balance of the loan when the property sells.
The prospect of foreclosure may leave you feeling overwhelmed. However, by relying on legal guidance, you can operate from a position of strength and approach the matter with greater confidence.