How To Get My House Out Of Foreclosure?

Definition of "How to get my house out of foreclosure?"

Roger Kennard real estate agent

Written by

Roger Kennardelite badge icon

Sonlight Realty

All foreclosures have the same cause - missed payments. Financial difficulties come without notice. You may lose your job overnight, your business may no longer fight with the competition, or your spouse got sick and couldn’t work for a long time. Unemployment is dangerous for all debtors. Health issues are also a huge threat. For entrepreneurs, a tough competition may mean lower profit margins, which in turn forces them to take home lower salaries. Of course, most of us picture a future where incomes keep growing year after year. In reality, nobody can count on this scenario. So, be prepared to face a foreclosure. However, the good news is that foreclosures can be avoided.

You can get your house out of foreclosure in a few ways.

First of all, your lender may agree to allow you to stop making payments on your loan or to reduce the amount you have to pay each month. Demand a forbearance agreement. During that time, foreclosures cannot be initiated.

Secondly, you can refinance your mortgage. In this way, you can lower your monthly payments, although the cost of the new loan might be higher.

Another way to get your house out of foreclosure would be to file for Chapter 13 bankruptcy. When you initiate this process, the foreclosure stops.

Sometimes, lenders are open to loan modifications as well. It is vital to notify your lender as soon as you feel that you might not be able to make the payments on time or in full.

With these four measures, you may still keep the house. But when your income is low, you also have to spend less. Give up your wants and focus on your needs. However, don’t make an idol out of your house. There are far more precious things in this life that money can’t buy.

Finally, you can get your house out of foreclosure in two more ways which will also force you to move. A sign of maturity is to own up when you can’t make the payments anymore. Probably you’ve made the wrong choice when you bought the house. You went a little bit over your budget and at the first financial challenge, you lost control.

So you may ask your lender permission for a short sale, especially if you have the cash to cover the difference between the sale price and the outstanding balance. If you don’t succeed, you still have one more choice, though not all lenders are open to it. It’s called “deed in lieu of foreclosure” - the bank becomes the owner of the house and the mortgagor walks away free of any obligations. This is usually a measure of last resort, especially for people with bad credit scores.

Foreclosures are new opportunities. You can rebuild your life after a foreclosure and become a homeowner again. Don’t lose hope!

image of a real estate dictionary page

Have a question or comment?

We're here to help.

*** Your email address will remain confidential.
 

 

Popular Mortgage Questions

Popular Mortgage Glossary Terms

A request for a loan that includes the information about the potential borrower, the property and the requested loan that the solicited lender needs to make a decision. In a narrower sense, ...

The interest rate adjusted for intra-year compounding. Because interest on a mortgage is calculated monthly, a 6% mortgage actually has a rate of .5% per month. If there were no principal ...

Advice on where to go to get a mortgage. A borrower can always select a loan provider by throwing a dart at the Yellow Pages. A referral is of value if it raises the probability of a ...

Equations used to derive common measures used in the mortgage market, such as monthly payment, balance, and APR. ...

A comprehensive and time-adjusted measure of loan cost to the borrower. IC on a Mortgage: IC is what economists call an 'internal rate or return.' It takes account of all payments made by ...

The definition of credit risk is at the core of lending. Banks lend money to businesses and individuals and expect to recover the principal and win interest. Banks offer a variety of loans, ...

The largest loan size permitted on a particular loan program. For programs where the loan is targeted for sale to Fannie Mae or Freddie Mac, the maximum will be the largest loan ...

An ARM on which the lender has the right to change the interest rate at any time, for any reason, by any amount, subject only to a requirement that the borrower be notified in advance. The ...

The sum of all interest payments to date or over the life of the loan. This is an incomplete measure of the cost of credit to the borrower because it does not include upfront cash ...