Bankruptcy, Foreclosure or Mortgage Relief?
Should you be dealing with some financial catastrophe and fear losing your property, realize you are not alone. Like millions of other property owners, you could have lost a job or suffered a pay cut, your adjustable rate mortgage could possibly have reset so you can’t afford the payment, or falling property values mean you can not refinance. You could think that bankruptcy, foreclosure and loss of your house is inevitable. One answer doesn’t cover every scenario, and you will have possibilities that include keeping your home while you sort out financial challenges. Explore all options before concluding that all will be lost in foreclosure or bankruptcy.
Your loan payment, which will include amounts for property insurance and taxes, is most probably the heaviest single bill you have to pay every month. The check covers your housing needs, and it shows an investment for many of us homeowners - you will find financial and emotional aspects as well. If you can’t make your mortgage repayments, you have to have a hard review of your situation, financially and otherwise, and come to a decision on a strategy that’s the right one for you. Consulting a bankruptcy or real estate lawyer in your area can help with your decision-making process.
Consider All Options
Here is a set of options and factors it is important to consider:
- What is the degree of your financial crisis - is there a principal element, like a job loss, or is paying one debt at the root of one’s financial problems, like medical bills or your mortgage?
- Is your financial crisis short-lived, such as a short period of unemployment or underemployment, or is there an enduring change, such as a disability which will affect your earning power on a long-term basis?
- How much equity is in your house?
- How does the value of your house compare to the debt it secures - do you owe more than the house is worth?
- How does your current home meet your housing needs - is it the right size, what are the ongoing maintenance and ownership costs, and does the location meet your lifestyle, family, and employment needs?
- Is home ownership the best way to meet your housing needs? Do you have the abilities and resources needed to own the place in which you currently live?
- If you want to keep your home, have all options for loan modification been explored?
- If you don’t want to keep your home, have you tried to sell it, either through conventional means or through a short sale?
- Is your lender willing to pursue foreclosure alternatives, such as accepting a deed in lieu of foreclosure?
- Have foreclosure proceedings started, and if so, how far along is the process?
- Would you qualify Chapter 7 or Chapter 13 bankruptcy relief?
- Do you have other debts, and could those debts be discharged or restructured through bankruptcy?
Making Home Affordable Relief
Before reaching the significant stage of bankruptcy or foreclosure, determine if refinancing or changing your mortgage is a possibility. Reacting to widespread economic crises suffered by so many homeowners, the Making Home Affordable program offers relief. Financialstability.gov is a government Internet site that has information on eligibility as well as process to getting help. The Website has an interactive tool for helping see whether you’re eligible for relief.
Making Home Affordable has two types of relief:
1.Home Affordable Refinancing for homeowners who’ve loans owned by Fannie Mae or Freddie Mac. This program targets people that haven’t got the ability to refinance their mortgages at today’s substantially low rates as a consequence of declining home values, leaving them “underwater” with a mortgage balance that’s above the home value
2.Home Affordable Modification for homeowners who can’t afford their mortgage payments thanks to loss or decrease in income, increased mortgage rates or who don’t get a Home Affordable Refinancing. This program aims to change your mortgage terms in order to bring the payment within an easily affordable range
Begin by contacting your lender or loan servicer, butbe patient and persistent. These programs are new, and lenders must work to quickly implement the programs and also the demand is high. In case you don’t qualify for these programs, work with your lender to find a solution. Avoiding foreclosure is frequently best for all parties.
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