Homeowners fighting foreclosure often feel overwhelmed by the magnitude of their situation. When trying to save their home, the choices available can often seem confusing or even inaccessible. Below we take a look at five ways that a homeowner can save their home from foreclosure.
- If you're facing foreclosure and want to remain in your home, you may consider arranging a forbearance with your mortgage lender. This may be particularly helpful if your foreclosure is due to only temporary circumstances and you are sure that your circumstances will change shortly. Forbearance will allow the debtor to forgo mortgage payments for a specified period of time.
- Homeowners facing foreclosure may also want to consider a mortgage modification if their foreclosure is due to inflated mortgage costs. Some lenders may be willing to modify the debtor's mortgage so that monthly payments are less.
- Homeowners facing foreclosure who also have other debts such as credit cards, may want to consider filing Chapter 13 bankruptcy or Chapter 7 bankruptcy. Bankruptcy will allow the debtor to discharge their unsecured debts while saving their home from foreclosure as a long as they continue to pay their mortgage loan payments.
- If a homeowner facing foreclosure does not want to remain their home but wants to avoid having a foreclosure on their credit record, the debtor may want to sell their home via a "short sale." Basically a short sale is when a homeowner sells their property for less than what they owe on the mortgage. Currently the government is offering cash incentives for homeowners who use this method. However, mortgage lenders are not "required" to agree to a short sale.
- A homeowner wishing to avoid foreclosure but not keep their home may also want to consider filing bankruptcy and returning the home to the mortgage lender via bankruptcy. If this method is used, the debtor will not owe on the mortgage after their bankruptcy case has been discharged.