Is your situation beginning to put a strain on your mortgage, and you’re not confident that you’ll be able to pay it in the next couple of months? Unfortunately, a foreclosure will be imminent if you don’t find a way to pay your balance. On a brighter note, you have still have options to avoid foreclosure, prevent too much lose, and not be part of the 214,323 properties that were foreclosed.
The right foreclosure prevention measure is different for every homeowner. Everyone is in their unique situation, and the measures aren’t always applicable to all. You’ll learn more about this as you read along.
Take note also that you can do any of these strategies even after you’ve received the Notice of Default and Court Order to Foreclose. As long as the bidding hasn’t happened yet, you still have a chance to turn the table around in your favor.
So these are the ways how to prevent the foreclosure of your Doraville home:
Refinance Your Mortgage
This involves finding another lender to finance the remaining amount you owe to your original lender. The best time to refinance your mortgage is before the foreclosure process. Once you see that paying your mortgage in the following months will be nearly impossible, you can look for other mortgage lenders who will lend you at a lower interest rate.
Most lenders who also refinance only accept homes with positive equity. Positive equity means that the value of your home now is more than what it was worth when you first bought it. According to global information company TransUnion, you should have at least 20% equity in your home to get it refinanced. This isn’t mandatory, though; the higher the equity, the higher your chances of getting approved. A higher equity means that there is a lesser chance for you to default on your loan.
Research as much as possible and look out for government-subsidized refinancing programs like the Streamline Refinance Program. Government-backed loans often have the lowest interest rates and friendliest qualifications.
Work Out a Deal With Your Bank
You can also work out a deal with your bank where you sit down with a mortgage or foreclosure specialist and talk to them about changing the structure of your mortgage. Specifically, there are three (3) ways to solve the issue with your bank. These are:
As long as you can commit to the new plan and not waste the opportunity, staying with your original lender might be a less inconvenient way to settle your mortgage issue than having it refinanced by another.
Make a Short Sale
A short sale is when you sell the property and use the proceeds of the sale to pay down or pay off your outstanding amount with the bank. This keeps a foreclosure from impacting your credit score, and it gets the bank off your back!
To make a short sale, you have to make sure first that the value of your home can cover your remaining mortgage balance. This means that if you still have $150,000 more to go with your loan, the value of your home when you sell it shouldn’t be lesser than $150,000.
In addition, you have to ask your bank’s approval before you proceed with a short sale. Your lender will be the one to determine whether the short sale will be able to cover everything you owe them.
Give You Deed-In-Lieu
Another option would be to go for a Deed-In-Lieu. This involves willingly handing over the deed of your house to the bank. In turn, the bank agrees not to put you through the time-consuming, energy-draining, public foreclosure.
A Deed-In-Lieu relieves you of your mortgage obligations, as long as the current value of your home is equal or greater than the amount you owe on the mortgage. If the value of your home is lesser, your lender can still accept the Deed-In-Lieu but will require you to pay the difference.
A Deed-In-Lieu is only applicable if there are no other liens on your property and is often the last resort for homeowners who couldn’t qualify for a short sale, loan modification, and refinancing. If you don’t want to make your foreclosure public, voluntarily transferring your home’s title to your bank will also give you the privacy you want.
File for Bankruptcy
Bankruptcy may sound more drastic than foreclosure, but it really isn’t. While it’s true that your credit history is tainted after going for either foreclosure or bankruptcy, the difference is that going for bankruptcy strips you of all your loan obligations. Your credit card balance, overdue utility bills, personal loans, mortgage loans, car loans, medical loans, etc., will be completely wiped out.
Needless to say, this means that you can start fresh and start rebuilding your credit score. In foreclosure, your credit score remains the same, and you can still end up with a balance you need to pay your lender (even after the foreclosure bidding). You can check out the legal encyclopedia NOLO for an overview of the bankruptcy process in Georgia.
If you want to explore making a short sale first before any other options, you can go about it quickly by selling to a professional home buyer like Spire Property Solutions. We buy houses in Georgia for cash, and we do it fast. Contact us by filling out the form on this page or give us a call at (678) 318 – 1801.
Looking forward to helping you!