Homeowners may sometimes find it difficult to pay the loan due to many unforeseen circumstances, like unemployment or emergency medical conditions. When they have missed their monthly payments, their house may be sold in a foreclosure auction. So, it is very important to find ways to prevent this foreclosure sale; as it may result in the loss of the property and the foreclosure may affect the credit rating of the homeowner.
These are the 7 ways to stop a foreclosure fast:
- Refinancing the loan:
Refinancing means lowering the interest rate of the existing loan by taking another loan. This can help in reducing the monthly payments, thus increasing the cash flow.
- Forbearance Plans:
This is a short term agreement between the borrower and the lender when the borrower is suffering from a sudden financial crisis. This agreement either suspends the payment for a certain period of time or reduces the amount of payment or the interest for a short period of time.
- Deed in Lieu:
This deed helps the borrower get rid of all their obligations to the lender by signing an agreement, stating that the homeowner has transferred the ownership of the house or property to the lender.
- Deed for Lease:
This deed allows the homeowner to stay in the house on rent after transferring the ownership of the house to the lender, for a certain time period.
- Short Sale:
To avoid a foreclosure, the bank may accept the amount that is less than the total amount payable. Short sale, therefore, means that the borrower is ‘short’ of the amount to be paid.
- Loan Modification:
Loan modification service providers help in changing the terms of the loan permanently so that they become more favorable to the borrower. For this, the borrower needs to inform the lender of their current situation. There are many loan modification companies that can help homeowners in modifying the terms of their loans.
Once the bankruptcy is filed, the government and the law prevent the collectors to collect money. This is only temporary and once the financial crisis is solved, the borrower needs to repay the money to the lender.