Can I Avoid Foreclosure and Keep My Home?

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How to Avoid Foreclosure and Keep Your Home

If you want to definitively avoid foreclosure and keep your home, there are a few ways you can work with your lender to resolve your mortgage issues. You can either pay off the missed payments or loan in a lump sum or discuss refinancing or forbearance with your lender. Let’s take a look at these options in more detail.

Pay Off Your Debt in a Lump Sum

Known as reinstatement, in some cases, your lender may allow you to repay the missed mortgage payments and any interest or fees in a lump sum to reinstate your mortgage. At that point, you resume your standard monthly payments, avoid foreclosure, and keep your home. 

Paying back the missed payments may only be an option for a fixed amount of time. Once you are in default, your lender may require you to pay back the entire mortgage amount in order to avoid foreclosure. This option will not be feasible for all homeowners, who may have to look at alternative ways to avoid foreclosure and keep their home.

Refinance Your Home Loan

Refinancing your loan may be an option to avoid foreclosure and keep your home. If your lender is open to refinancing, your mortgage will be reevaluated. A new mortgage will replace your old one and some of the debt may be forgiven. The new loan will factor in the old debt, but allow you to make payments on it over time. 

Lenders may be open to refinancing because it is more cost effective for them to recoup the debt in future payments versus going through the foreclosure process. If you want to avoid foreclosure and keep your home, refinancing your mortgage may be an option.

Talk to Your Lender About Forbearance

Forbearance is a period of reduced or suspended mortgage payments which your lender can agree to in order to help you pay back your debt, avoid foreclosure and keep your home. It may take the form of a repayment plan, or an agreement with your lender to resolve the missed payments over a set amount of time.

Forbearance can be helpful if you were temporarily unable to make your payments due to a loss of income, medical emergency, or other financial hiccup. If you can prove to your lender your ability to make up the lost payments with a bit of leniency, they may be willing to grant a forbearance.

If none of these options are available or helpful to you, it’s time to consider selling your home to avoid foreclosure.

Avoid Foreclosure and Sell Your Home

You may be wondering, why sell my home to avoid foreclosure if I have to part with my home anyway? And you’ve got a point — you’re likely to have to move either way. However, even if your home goes to auction and your mortgage debts are dissolved from the sale, a foreclosure leaves a significant mark on your credit which is very difficult to recover from. With that kind of credit hit, it will be harder to find a lender willing to work with you in the future when you want to buy your next home — and if you can, you can expect a lot of conditions and higher rates when that lender tries to mitigate their risk in lending to you.

No one wants to go through foreclosure and lose their home, but if you must part with your home, it’s much better to do it on your own terms and sell before the foreclosure is complete. 

If you’re selling your home to avoid foreclosure, there are additional considerations you need to make. The home sale must take place before your home goes to auction, so finding a buyer as soon as possible is critical. In many cases, the best way to sell your home to avoid foreclosure is to sell to a real estate investor. 

Sell Your Home to a Real Estate Investor

A real estate investor will walk through your home with you and make you a fair offer based on market rate. They will purchase your home in its current condition, so you don’t need to worry about making repairs or preparing your home for sale. Also, because their offer is available immediately, you don’t have to wait for the buyer to secure financing. This means you can sell according to your timeline. If you’re facing foreclosure and need to sell your home fast, you can sell your home in as few as five days and resolve your debt, effectively avoiding foreclosure. 

With your home sold, you’ll be in a better place to move on. Your credit won’t have sustained the hit of foreclosure, so you will have an easier time securing a new home loan in the future if you decide to purchase a home again. Although you had to part with your home, you’ll be that much closer to owning your dream home again in the future.

Sell to a Real Estate Investor and Keep Your Home

There’s one final option if you want to avoid foreclosure and keep your home. Some real estate investors will help you resolve your debt to avoid foreclosure and allow you to continue living in your home. This creative solution allows you to make rent payments on your home without the strain of a mortgage and pending foreclosure. In some cases, you may even be able to work towards owning your home again. If you want to avoid foreclosure and keep your home, this may be an excellent option for you. 

Working with the right real estate investor is important, as not all will provide this option. That’s why Renewed Homes is different. We’re always working to find the best solutions for our clients. If you’re at risk of foreclosure, but still want to keep your home, we can help. Give us a call to see what your options are.