The Options Available to Stop Foreclosure of Your Real Estate

Foreclosure is something that no homeowner wants to face. It can mean the loss of your dream home, any equity in your home, your credit rating and most importantly, your dignity. Foreclosure is a very public process, with your name listed in the public court records and then published in your local newspaper. Even when you have put everything behind you and ready to move on with our life, the incident follows you like a shadow. It appears on your credit report for at least 7-10 years. In addition, all mortgage applications will ask about it.

Once real estate is lost to foreclosure, the owner’s credit score can drop by as much as 250-280 points. The credit score can be restored only after strenuous on-time payments done regularly over a period of three years or more. If the foreclosure is an isolated event, you may be able to restore your records in 24 months if your credit record is otherwise sound. But this usually does not happen as foreclosure comes with escalating rates that only push the individual deeper into debt.

If you have experienced a temporary setback, you may have several options available to you to stop foreclosure of your real estate.  Here are several proven strategies to avoid a foreclosure:

Don’t Panic. Face the Situation Squarely, Calmly

The prospect of being unable to make their mortgage payment paralyzes many with fear and anxiety. They start avoiding phone calls and defer paying the bills. The best way to start repairing the situation is to stop panicking and act fast.  Gather your bill statements and most importantly, call your lender to explain your situation.

Talk to Your Lender to Work out a Plan

Avoiding your lender is the last thing you should do. Contact your lender as soon as you realize that you have a problem. Remember, lenders do not want your house. Their business is structured to deal with such situations and that’s why they will have many options to help you through tough financial times. Responding to all mail from your lender will send a clear signal to them that you are serious about resolving the issue.

Mortgage Restructuring

Mortgage modification is a practical option available to stop foreclosure. If you have experienced a permanent reduction in income and cannot afford a repayment plan, the terms of the loan may be adjusted to match your current income levels. The interest rate is lowered or the term is extended so that monthly payments become affordable.

Forbearance Agreement

Forbearance agreement is normally used if you have experienced tough financial times that’s now firmly behind you and you can resume making regular payments. It is a popular option when you can’t pay all of your past due mortgage payments at once.  Under the agreement, the lender agrees to move your pending payments to the back of the loan. This helps you stop foreclosure and also gives you a long breather to get things back on track.

Working out a New Repayment Plan

Modifying the repayment plan is one of the most preferred methods of lenders.  Here the lender agrees to let you draw level with the back payments by adding a portion of the pending amount to each current monthly payment until the account is back to normal again.

Refinancing Your Mortgage

Mortgage refinance is a way out if you have suffered a setback financially and unable to make regular mortgage payments. You can refinance your loan with your existing lender or a new lender but you must furnish proof of good credit prior to the setback, and also establish that you can now support the new mortgage payment. This is usually not a sound option unless you agree to very high interest rates. But it can save you from foreclosure and help you bounce back when earnings improve and your finances are back on track.

Filing for Bankruptcy

Filing for bankruptcy will temporarily stop the foreclosure case. You are allowed to file any time before the foreclosure auction. However, this should is usually the last and most painful way of stopping foreclosure. The move will not permanently end the foreclosure but it can buy you months or years without losing your property. This method however has a high risk of failure. This is because the reorganization arrangement typically requires the homeowner to make plan payments that are much higher than the original payments. Given the tough financial situation, that is often an uphill task.

Author Bio: Karrie Morton is an online marketing associate of HomePropertySearch.net - provides real estate services. Karrie’s interest range from providing improvement tips on home and yard. She also loves finding new ideas for home improvement projects. Connect with Karrie through her social media accounts. Facebook | Twitter | Google+ | Pinterest