Options For Avoiding Foreclosure

The rise in foreclosures in the U.S. housing market has been drastic, due to the collapse of housing markets and the national financial crisis. If you are looking for foreclosure solutions, here are some tips that may help you. There are many options for avoiding foreclosure, and while they may not always be easy, they are workable solutions.

Avoiding foreclosure

Forbearance or repayment. A forbearance plan allows the homeowner to repay overdue mortgage amounts over a period of time. Usually, the regular mortgage payment is made in addition to a portion of the back payments. Some lenders require the homeowner to qualify for forbearance.

Mortgage modification. Mortgage modifications can result in a lowering of the interest rate on the loan, the term of the loan, or the principal balance, which can lead to a mortgage payment that is more affordable. However, some people in Arizona as opposed to other parts of the country do not qualify for mortgage refinance if they are too upside down in their mortgage debt to home value ratio. The homeowner must also qualify for a mortgage modification.

Deed in lieu of foreclosure. This solution allows the homeowner to simply return the property to the mortgage company instead of going through the foreclosure process. The homeowner must vacate the property, however. A deed in lieu of foreclosure can also be reported as a foreclosure to credit bureaus.

Short sale. A short sale may be accomplished with the help of a qualified real estate agent experienced in such matters. A short sale can occur if the homeowner owes more on their property than it is worth. It keeps a foreclosure off the homeowner’s credit record, and he or she can qualify for another mortgage in as short a time as two years. The homeowner must show financial hardship, such as a mortgage payment increase, job loss, divorce, excessive debt, etc. to qualify for a short sale.

Rent the property. If your mortgage payment is low, you may be able to rent out the property and cover the mortgage with the rental payment. This option allows you to keep the property; however, rent does not always cover the cost of taxes and maintenance.