As the foremost authority on Credit Repair Miami, we’d like to offer this opportunity to counsel you on options available to you before facing foreclosure.
When you fall behind on mortgage payments, it’s very possible you can lose your home through foreclosure. A lender or mortgage holder can repossess or sell property in order to repay the debt owed on that property. Foreclosure will significantly affect your credit score, in addition to causing you a lot of stress. It’s important to know what your rights are, and understanding them will give you a chance at possibly keeping your home, or at least reduce the damage to your credit and financial health.
There are laws that lenders must abide by, which vary by state, that require homeowners to be provided with a written notice of default, and a set amount of time to rectify the situation. Remember, if you are having trouble making your mortgage payments, the following options can help reduce your chance of foreclosure.
Step 1: Have an honest conversation about your financial situation
Even though financial conversations can be very uncomfortable, it’s definitely important to take a moment to analyze your situation. What you need to consider is coming up with a realistic number that you can afford to pay each month based on your income and budget. This way, you can still attempt to keep your place.
Step 2: Review the appropriate documents
Take a moment to look over all of the documentation between you and your lender. There may be clues in your mortgage documents, notices and letters about how your lender might proceed with the foreclosure. These documents may also include clauses that allow the lender to sell your home in order to settle overdue mortgage payments.
Step 3: Contact your lender
It’s essential that you communicate with your lender in order to negotiate your mortgage rate. This is why it’s so important to have done your homework first, in order to be confident and organized when you talk to your agent. Keep referencing the number that you came up with during your financial evaluation. Keep contacting your lender if you have to. When you call, advise that you are following up with the mortgage rate negotiation. Also, make note of who you spoke with and at what time.
Step 4: Work with the MHA program
USA.gov recommends working with the Making Home Affordable (MHA) program. By seeking help through this program, you will have access to free counselors that can provide advice and assistance to keep your home or get out safely. You can get more information on your options and what you will need by visiting https://www.makinghomeaffordable.gov/pages/default.aspx
However, be careful with mortgage relief scams that will ask for a fee in advance.
Step 5: Talk to a real estate agent
It’s definitely better to sell than to have the bank take your home away. Seek out a realtor that specializes in foreclosures and short sales. Foreclosures are a long process and you should seek out all of your resources.
Step 6: Find an additional source of income
If there’s a hobby that you enjoy that can bring you some extra cash, or even have a sidehustle that you never actually had the chance to start, now is the time to do so! By trying to find ways to make additional income, you will be able to supplement some of your monthly expenses.
Ideally, you want to avoid foreclosure altogether. But, if you are faced with a difficult situation where you can no longer make payments towards your mortgage, it’s important to know and understand the options and resources that are available to you. Check out this video on the Keeping it Real With Credit channel to learn what steps to consider when faced with foreclosure.