Alternatives to When You're Behind on Payments
You have options!
Below are 9 Options When Facing Foreclosure
- DO NOTHING- If you do nothing, you will most likely lose your home at a foreclosure auction. Loan applications generally ask if you have ever been foreclosed upon. Credit reports also disclose this damaging information. Usually not the best option.
- PAYOFF/REFINANCE- Completely pay off your loan amount plus any default amount and fees. Usually this is accomplished through a refinance of debt. New debt is at a normally higher interest rate and there may be a prepayment penalty because of the recent default. With this option, there should be equity in the home.
- REINSTATEMENT- Paying the entire default amount plus interest, attorney fees, late fess, taxes, missed payments and fees.
- LOAN MODIFICATION- Utilizing the existing mortgage company to refinance the debt or extend the terms of the loan. This may allow you to catch up at a more affordable level. to qualify, you must prove to the lender you have fixed the problem that caused the late payment.
- FORBEARANCE- Lender may be able to arrange a repayment plan based on your financial situation. The lender may even be able to provide a temporary payment reduction or suspension of payments. Information will be required from the lender to show that you are able to meet the new payment plan requirements.
- PARTIAL CLAIM- A loan from the lender for a 2nd loan to include back payments, costs, and fees.
- DEED-IN-LIEU OF FORECLOSURE- Give the property back to the bank instead of the bank foreclosing. Banks generally require the home be will maintained. Most loan applications will ask if you have ever had a Deed-in-Lieu of Foreclosure.
- BANKRUPTCY- This option can liquidate debt and/or allow more time. We will refer you to a qualified bankruptcy attorney upon request.
- Chapter 7 (Liquidation) To completely settle personal debt.
- Chapter 13 (Wage Earner Plan) Payments are made towards a plan to pay off debts in 3-5 years.
- Chapter 11 (Business Reorganization) A business debt solution.
- SALE- If the property has equity (money left over after all loans and monetary encumbrances are paid). You may sell the home without lender approval through a conventional home sale. In this case, you will receive cash from the sale. On the other hand, a Short Sale may be negotiated with your lender if you owe more than the property is worth.
Below, you will find the weekly lender questions that you want to ask yourself before taking the next steps.