What to Do If You Are Faced With The Prospect of Foreclosure
Foreclosure isn’t easy. It means you are unable to continue making payments on your home and are forced to choose another option. Once out of your home, what happens then? As Dean Graziosi noted, the past and current states of the economy have meant foreclosure for many homeowners. This means you are definitely not alone. The good news is there may be some alternatives that will help you avoid foreclosure, or get back on your feet if you find yourself faced with it. An article on MSN discusses how foreclosures are working these days and what it all means for homeowners.
Some solutions to foreclosure are temporary while others are more permanent. Just because you may be forced to foreclose on your home, that doesn’t mean you won’t be a homeowner again. In fact, for some, it is happening more quickly than they may have thought it would in the beginning.
One temporary solution to foreclosure is the advanced claim. This is for homeowners who are presently having difficulties that are expected to pass in the near future. Here, the insurer pays the delinquent amount to the servicer. In return, a promissory from the borrower will be received. The mortgage loan is then whole. Then, part or all of the borrower’s advance will be collected over a period of time.
A forbearance plan is another temporary solution. This is typically for keeping owners in their homes during short-term times of financial crisis such as temporary loss of or decrease in salary. Here, there are usually long-term prospects for income increases expected. These increases will need to cover mortgage obligations. In a case such as this, the specific circumstances of the borrower are taken into consideration. The borrower may then be permitted to make reduced monthly payments. Over time, the payments will increase in amount. This may be stipulated for a period of time ranging from six to 18 months or longer, depending on the specific circumstances involved.
A permanent alternative may be a loan modification. A homeowner who has experienced what is expected to be a permanent reduction in income may be able to take advantage of this solution. Here, the interest rate may be reduced, thus making the monthly payments easier to meet.
A deed in-lieu of foreclosure is another permanent alternative, but it is often a last resort. When this occurs, the borrower voluntarily gives up the property rights to the lending bank or “servicer.” While this may appear to be better than a foreclosure in terms of credit for the borrower, it may not be a good option. In a case such as this, it is best to seek professional advice and assistance to determine whether or not it should even be considered.
The thought of foreclosure is a daunting one. While there are options, sometimes it is inevitable. It is important to remember, however, that foreclosure doesn’t mean a homeowner can never own a property again. You can read more about the various options available by visiting Dean Graziosi’s website.