Worried about losing your home and wondering how to avoid foreclosure? Don’t panic.
Losing your home to foreclosure is a terrifying prospect. Not only do you lose your home and all of your belongings, but you may also be liable for a Deficiency Judgment if the property is sold for less than the total amount owed on the mortgage. Both of these things can affect your ability to qualify for credit in the future. So how do you avoid foreclosure if it looks like it might happen?
This article will provide tips on how to avoid foreclosure and a deficiency judgment.
How to Avoid Foreclosure
1. What is a foreclosure, and how does it happen?
A foreclosure is a legal process whereby your lender repossesses your home and forces you to move out. If you miss three or more mortgage payments, your lender can begin the process.
How quickly does foreclosure happen?
It can vary from state to state, but generally, it takes several months for a foreclosure to be finalized.
2. What are the consequences of foreclosure for homeowners?
For homeowners, foreclosure can be devastating. Not only do you lose your home and all of your belongings, but it will also affect your credit score and make it difficult to qualify for future loans. If your home is sold for less than the total amount you owe on the mortgage, you may also be liable for a Deficiency Judgment: a court-ordered judgment against a homeowner for the difference between what is owed on the mortgage and what the property sells for at auction.
3. How can homeowners prevent foreclosure from happening to them?
If you are struggling to make your mortgage payments, the first thing you should do is call or write to your lender’s Loss Mitigation Department. Explain your situation and be prepared to provide them with financial information like your monthly income and expenses. You may also want to consider hiring an attorney who specializes in foreclosure prevention.
4. How can homeowners avoid a deficiency judgment after foreclosure proceedings have concluded?
There are a few things homeowners can do to avoid a deficiency judgment. One is to negotiate with the lender and try to reach an agreement on the amount owed. Another is to file for bankruptcy, which will discharge the debt owed on the mortgage.
5. What are some resources available to homeowners who are struggling to make mortgage payments?
There are several options available to homeowners who are struggling to make their mortgage payments. These include:
- Loan modification: This is when your lender agrees to change the terms of your loan, such as the interest rate or the length of the loan, in order to make it more affordable for you.
- Refinance: This is when you take out a new loan to pay off your current mortgage. This can be a good option if interest rates have gone down since you originally took out your mortgage.
- Forbearance: This is when your lender agrees to temporarily suspend or reduce your mortgage payments. This can give you some time to catch up on missed payments or make other arrangements.
The most important thing to remember is that you should not ignore the problem. The sooner you take action, the more likely it is that you will be able to avoid foreclosure and a deficiency judgment.
6. Where can homeowners go for more information about foreclosure prevention and avoiding deficiency judgments?
For more information about foreclosure prevention and avoiding deficiency judgments, homeowners can contact their lender, a housing counselor, or an attorney who specializes in foreclosure prevention.
You can also find more information at the website for the Department of Housing and Urban Development: HUD.gov.
How the Mortgage Genie Can Help
If you’re struggling to make your mortgage payments, the Mortgage Genie can help. We offer home refinance loans, loan modification assistance, and more. We can help you find a solution that fits your needs and budget. Contact us today to learn more.