Due to any number of unforeseen circumstances, people can fall behind on their mortgage and have a hard time catching up. Once you start to fall two or three months behind, things can get stressful very quickly.
It can take up to six missed payments depending on the lender, but eventually your bank will begin the foreclosure process after a number of months. Rather than losing your home to this process, there are other options available that are worth exploring.
Work with a Housing Counselor
There are various reputable agencies throughout the country that work specifically with individuals who are in danger of losing their home. These companies can act as your professional advocate and help you to negotiate with your lender. Sometimes their solutions include receiving temporary relief from making your payments, assuming that you will be able to catch up later on, or they might be able to adjust your interest rate to allow you to slowly chip away at your balance.
Refinance Your Loan
Many lenders offer this as a direct option to avoid foreclosure, and typically will require a rigorous application process like what you experienced with your first loan. The benefit of this process is that your old loan, including all past due payments, will be paid off and you’ll begin a new loan with a fresh start.
Sometimes this can be a bit difficult though, as your interest rate might go up and you start over with a new 30-year loan. However, for most people it’s a much more desirable option when compared to going through foreclosure.
Filing For Bankruptcy
Getting behind on your house might be an isolated incident due to illness or loss of income, while for others it could be part of a larger problem. If you find that you’re in over your head with missed mortgage payments as well as defaulting on other loans or credit cards, it might be worth considering filing for bankruptcy.
There are two types of bankruptcy, Chapter 7 and Chapter 13, and one might be more suitable than the other depending on your desired outcome. In some cases, filing for bankruptcy might cause you to lose your home, but it will provide a fresh start for your finances moving forward.
Reinstate Your Loan
This option is probably the most straightforward but can be challenging to complete. Essentially, you have the chance to get caught up on your missed payments, plus interest and fees, before your lender begins the foreclosure process. In many cases this would mean having a cash reserve of many thousands of dollars, but can be achieved through a personal loan from friends or family.
If you’re worried that you might be facing foreclosure and want to remain in your home, contact Annette Sanchez Law today. We understand that the situation might feel out of control and we are here to help.
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