Ways to Save Your Home From Foreclosure
Are you losing sleep because of the possibility that your home, which you have worked hard to invest on, can be taken away from you and your family in foreclosure? Can you bear the thought that the place which holds lots of memories will be put up for auction? No one would ever want something as precious as a home to vanish due to either short or long term financial setbacks. In such a dreadful situation, there are ways you can still do to save your home from foreclosure.
Here are your options:
1. Refinance
This will help lower your interest rate, your current mortgage and your monthly payments to a more suitable level. This is likened to a new loan but will only make sense if you have not missed any mortgage payments, have enough equity in your home and have accepted credit. If you do not qualify for refinancing, you may be able to apply for a mortgage refinance through the government's Home Affordable Refinance Program (HARP). However, this will only be possible if you have little or no equity in your home and are financially able to afford new payments.
2. Repayment Plan
This is an agreement between you and your mortgage company that enables you to make up for past-due payments over a specific amount of time to make your mortgage current. By the end of the specified period, you will have paid back the delinquent mortgage amount. You will only be eligible for a repayment plan if you have recovered from a short-term financial setback and can show your lender that you are financially able to repay your past-due amount.
In most cases, repayment plan is combined with forbearance when you are able to demonstrate that funds form a new employment, tax refund, bonus or other possible sources will be made available at a specific period in the future.
3. Forbearance
This can be given to you by your lender if you are currently facing a short-term financial difficulty and are in need of temporary assistance. With this option, your lender or mortgage company will temporarily reduce or suspend your mortgage payments for a specific period of time until you get back on your feet. This will only make sense if your financial setback is just temporary, or if you have already missed one to two payments or think that you will fall behind with your payments.
For those who may be facing unemployment, your lender may provide you with unemployment forbearance (six months) and if still unemployed after that period, an extended unemployment forbearance of another six months may be provided.
Forbearance is usually combined with repayment plan and reinstatement for you to pay off the reduced or missed payments after you have become financially stabilized.
4. Reinstatement
This is often combined with forbearance when you are able to demonstrate to your lender that you will be able to catch up with all your delinquent payments at a specific time in the future. This occurs when you make current your current past-due amounts in one payment.
5. Modification
Under the Home Affordable Modification Program (HAMP), you may be able to make an agreement with your lender to change the original terms of your mortgage - lowering payment amount, interest rate, length of loan, etc. This will only be possible if you do not qualify for the federal HARP, you took out your loan on or before January 1, 2009, you are currently living in the property as your primary residence, you are facing a temporary financial difficulty and you will be able to spend more than 31% of your pre-tax income on your payments.
If you are facing the possibility of foreclosure and would want to work it out with your lender, these are the five options you can try. Do not simply lose hope and do nothing. Your home is your greatest investment and it is the fruit of your hard labor. So, do everything possible to prevent others from taking it from you and your family!
Here are your options:
1. Refinance
This will help lower your interest rate, your current mortgage and your monthly payments to a more suitable level. This is likened to a new loan but will only make sense if you have not missed any mortgage payments, have enough equity in your home and have accepted credit. If you do not qualify for refinancing, you may be able to apply for a mortgage refinance through the government's Home Affordable Refinance Program (HARP). However, this will only be possible if you have little or no equity in your home and are financially able to afford new payments.
2. Repayment Plan
This is an agreement between you and your mortgage company that enables you to make up for past-due payments over a specific amount of time to make your mortgage current. By the end of the specified period, you will have paid back the delinquent mortgage amount. You will only be eligible for a repayment plan if you have recovered from a short-term financial setback and can show your lender that you are financially able to repay your past-due amount.
In most cases, repayment plan is combined with forbearance when you are able to demonstrate that funds form a new employment, tax refund, bonus or other possible sources will be made available at a specific period in the future.
3. Forbearance
This can be given to you by your lender if you are currently facing a short-term financial difficulty and are in need of temporary assistance. With this option, your lender or mortgage company will temporarily reduce or suspend your mortgage payments for a specific period of time until you get back on your feet. This will only make sense if your financial setback is just temporary, or if you have already missed one to two payments or think that you will fall behind with your payments.
For those who may be facing unemployment, your lender may provide you with unemployment forbearance (six months) and if still unemployed after that period, an extended unemployment forbearance of another six months may be provided.
Forbearance is usually combined with repayment plan and reinstatement for you to pay off the reduced or missed payments after you have become financially stabilized.
4. Reinstatement
This is often combined with forbearance when you are able to demonstrate to your lender that you will be able to catch up with all your delinquent payments at a specific time in the future. This occurs when you make current your current past-due amounts in one payment.
5. Modification
Under the Home Affordable Modification Program (HAMP), you may be able to make an agreement with your lender to change the original terms of your mortgage - lowering payment amount, interest rate, length of loan, etc. This will only be possible if you do not qualify for the federal HARP, you took out your loan on or before January 1, 2009, you are currently living in the property as your primary residence, you are facing a temporary financial difficulty and you will be able to spend more than 31% of your pre-tax income on your payments.
If you are facing the possibility of foreclosure and would want to work it out with your lender, these are the five options you can try. Do not simply lose hope and do nothing. Your home is your greatest investment and it is the fruit of your hard labor. So, do everything possible to prevent others from taking it from you and your family!
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