Owning a home is the dream of so many people throughout the U.S. That is why a foreclosure is such a worrisome topic, especially if you face financial issues.
With a foreclosure, the lender assumes ownership of a property when the borrower can no longer make payments on their mortgage. Fortunately, there are quite a few ways to avoid foreclosure and retain ownership of the home, depending on the circumstances. Here are a few points to keep in mind.
Talk with the lender
In many cases, lenders will work with homeowners to help them keep up with mortgage payments. When you contact them about any financial issues, you must explain the nature of the hardship and how long you expect it to last. You must also provide information on your assets, income, debt, and any other relevant financial matters. From there, make sure you keep up on all new correspondence and answer questions immediately to prevent the foreclosure process.
Work with the Federal Housing Administration (FHA)
People who received a loan through the FHA have even more foreclosure-avoidance options at their disposal. If you have an FHA home loan, you can pursue:
Mortgage modification – The FHA can extend the loan term, alter the interest rate, and add missing payments to the overall balance of the loan.
Special forbearance – The FHA may reduce or defer loan payments when homeowners face a temporary financial setback. They can also develop a payment plan to help you get back on track.
Partial claim – The homeowner receives a special, interest-free loan from the FHA to cover the costs of missing mortgage payments. Borrowers only need to pay off the special loan when they pay off the original mortgage or choose to sell the property.
The best thing you can do to keep your home is to contact the lender before late or missed payments. The sooner you act, the more likely it is you will keep the property.