Many home owners have faced the possibility of bank repossession but found ways to prevent it. What Are the 5 Most Common Strategies People Use to Avoid Foreclosure?
There's a saying every Georgia real estate agent learns early in their education process: "If you can't pay, you can't stay." This is referring to the historically speedy Georgia foreclosure process.
When facing the worst, many distressed homeowners can avoid foreclosure if they do a little research and get expert help sooner rather than later.
Oftentimes, the true cost of foreclosure means more than just losing a property. The process usually comes with unpleasant baggage -- long-term consequences on your credit, your self-esteem, and your family’s well-being.
Ever wonder about the options?
The good news is that there usually are other solutions available that might help you avoid foreclosure. The secret is to take action before it’s too late. Depending on your situation, here are five very common scenarios that others have used.
The first three options are where most people start,
...depending on whether they are too far behind on their loan, as well as on their ability to pay:
1 Mortgage Modification
This has been the most sought-after solution in recent years, but not the most successful in the long run. Through some programs designed to help homeowners in distress, you may be eligible to modify your loan to reduce the principal and/or lower monthly payments. These programs vary from bank to bank, as do successful results.
Has the reason you missed your payments now been resolved? Then you might make one big balloon payment that includes all missed payments, legal fees and late fees, and thereby bring your loan current and qualify to be reinstated back into your loan agreement.
Once reinstated, if you have otherwise decent credit, and have equity in your home, refinancing may help you get back to a more affordable monthly payment. However, if you have already missed more than a few payments on your current mortgage, your credit might already have a ding.
The fourth option is many people’s option of last resort:
In some cases, bankruptcy may temporarily stop foreclosure and allow you to reorganize your debt. That is an important caveat: the foreclosure relief gained through bankruptcy is temporary. If you are still unable to make regular payments after the bankruptcy, the foreclosure will go forward.
The fifth option is considered by many as the best choice to avoid foreclosure, because of one big benefit--waiver of deficiency:
5 Short Sale
Your lender may allow you to sell the property at the current market rate, so no foreclosure happens. You get to sell your property instead. When you work with them, the bank accepts less than the amount you still owe, and usually agrees to release you from your obligation for the balance of the loan.
You get to walk away clean!