What can I do if I received a Notice of default?
Facing the possibility of foreclosure is one of the most distressing and challenging situation for homeowners. Fortunately, there are several strategies and resources available to help you navigate through these tough times and avoid foreclosure. In this article, we will talk about various options to safeguard your home and financial stability.
One of the most crucial aspects is to maintain open communication with your lender as soon as you realize you will not be able to keep your payments current. If you’re experiencing financial difficulties, contact your lender as soon as possible. Most lenders are willing to work with homeowners to find alternative solutions and avoid foreclosure. No matter which approach you take, always keep your lender informed about your intentions.
- Reinstate your mortgage: If you can access to any money as to make up ALL missing payments, plus any accumulated fees and costs, this is definitely the best and simplest option. Be aware that if you make only partial payments and don’t cover the amount required by your lender, it is very unlikely that you can stop the foreclosure process. This solution may seem not worth to be mentioned, but a lot of people can access to funds they are not aware of, like and old 401(k) account. Always talk to your lender before trying to reinstate the mortgage and be cautious if you think you won’t be able to keep your payments current in the long term.
2. Loss of mitigation option: You can work with your lender to get a loan modification, repayment plan, or a forbearance. This involves renegotiating the terms of the mortgage to either make it more affordable, restructure the loan, or suspend temporarily the payments. This could include a lower interest rate, extended loan term, or even a temporary pause in payments. You can personally talk to your lender about this option, though looking for an approved counseling agency is recommended.
3. Credit Counseling Services: Non-profit credit counseling agencies can provide valuable guidance and assistance not only about Loss of mitigation options, but they can help you to negotiate with creditors, explore debt management plans, and even create a budget. Look for reputable organizations approved by the U.S. Department of Housing and Urban Development (HUD). Click here to visit the HUD website
4. Refinance: If you don’t miss several payments yet, and your house equity allows for it, consider refinancing your mortgage with a different lender to get a new loan. The down side of this option is that if you already missed some payments, it can become hard to get approved for a new loan; though this is the best option if you are anticipating difficulties to make future payments.
5. Sell your house: If getting a new loan is not possible, you can still sell the house to pay-off your debt. With this option you won’t keep the house, but you may be able to save most of your equity, while not hurting your credit score. Work with a reputable buyer like Better Home of Tennessee if you want to explore this option.
6. File for Bankruptcy: Bankruptcy is by far the most challenging decision regarding this topic due to the stigma and long term consequences around it. Even then, it can be a very useful tool to help you keep your property if managed correctly. It can also help you gain time until you structure the best plan for your financial future.
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