It’s the American dream to own your own home. You were full of pride and hope when you bought your home and signed the mortgage loan documents. But fast forward several years, and life happens. Now you are facing hard times and unexpected financial obligations. This can lead to you being unable to make your monthly mortgage payment and eventually face foreclosure.
The best course of action to stop foreclosure in Portland is knowing your options and being proactive. Whether you are facing a temporary or permanent financial struggle, these options can help you avoid foreclosure.
#1 Loan Modification
As the name implies, a loan modification changes the terms of your mortgage to bring your loan current again. You’ll need to work with your lender to have them modify the loan to make it easier for you to keep making payments. There are a couple of things the lender can do to adjust your loan. If you can prove that you experienced a permanent reduction in income, you can request a lower monthly payment.
Another option is to move the outstanding payment balance to the end of the loan. You will continue to make payments like you previously did; you will just make payments for longer than you originally expected. There are a few loan modification programs available, and your individual circumstances will determine which one you qualify for. You could qualify for an in-house proprietary modification, a Fannie Mae, or a Freddie Mac Flex Modification.
#2 Forbearance Agreements
Are your financial issues short term? If yes, consider a forbearance. This solution is good for temporary struggles where you expect to gain the ability to return to regular payments in the near future. During a forbearance agreement, your monthly payments are either reduced or suspended for a specific period of time. The catch with this type of agreement is that most lenders require you to bring the loan current at the end of the forbearance. This means paying the missed payments or partial payments in full by the end of the forbearance.
#3 Loan Refinance
If you have a decent amount of equity in your home, then you could consider a loan remodification. With this process, you’re essentially taking out a new mortgage that is large enough to pay off the balance of the old mortgage. The new lender pays off the old lender directly, and then you start paying on the new loan. Sometimes, you can do a loan refinance through your current lender; or you can speak with a new lender for the refinance.
#4 Repayment Plan
If you can do some financial adjusting, you may be able to negotiate a repayment plan with your lender. The way most plans work is that you will make a larger payment than your standard monthly payment. You’ll negotiate with the lender to make a down payment and then the increased payments for a certain number of months. Most lenders will make an offer of three to six months. However, if you can show that you need the extra time, you may be able to negotiate for 12 to 18 months.
If you are serious about requesting a repayment plan from your lender, it can help to work with a loss mitigation professional. They can negotiate with the lender for a smaller down payment and a longer repayment period. This solution is a great option because most lenders are all too happy to agree to a repayment plan. The only catch is that you’ll need to be able to show proof on income that you can make the increased payments.
#5 Short Sale
If the lender wants to start foreclosure proceedings, you may be able to sell the home instead. It’s essential to have an experienced negotiator represent you in this type of deal. Otherwise, you risk the lender accepting the sale and asking you for the deficiency. The advantage of a short sale is that you can stay in your home while going through the process. This gives you a bit more time to figure things out. Once the home sells, the third-party buyer makes the payment, and the creditor accepts the selling price as the full payment of the loan.
This option is good because it prevents you from having a foreclosure blemish on your credit report. This means you can buy another home faster than if you have a foreclosure. Typically, people can buy another home within a year, whereas a foreclosure would have them waiting four years.
#6 Last Resort: File for Bankruptcy
Filing for bankruptcy can have a long-lasting negative effect on your credit score. It should only be considered a last resort option if you have larger financial trouble than just the overdue mortgage. Filing for Chapter 7 bankruptcy only delays the foreclosure a couple of months as you go through the bankruptcy process. It won’t prevent foreclosure.
Filing for Chapter 13 bankruptcy could be an option as it could force the lender to accept payments on the past-due balance. The problem is that you would also have to make your regular mortgage payments too. You may not be able to afford the monthly payments plus additional payments. It is best to consult with a lawyer if you’re considering bankruptcy.
#7 Deed in Lieu of Foreclosure
If a foreclosure is inevitable and you’ve exhausted all other options, you could opt for a deed in lieu of foreclosure. To do this, you’ll give clear title to the lender instead of the foreclosure. You’re essentially giving them the property you bought with the money you borrowed from them.
#8 Sell Your Home to Avoid Foreclosure
If you have equity built up in your home, you could sell the home on your own and use the proceeds to pay off the loan. It’s not too late, but you have to act now! Putting your home on the market takes time, though. Another option is to sell to a company like Shona Buys Houses. We can close fast and save your house from foreclosure. Instead of trying to stop foreclosure in Portland, you can sell the home and use the proceeds to satisfy the loan.
Don’t Wait to Seek Help
The worst thing you can do is stick your head in the sand and avoid the notices from your lender. Call your mortgage lender as soon as you know you can’t make a payment or you have missed a payment. The sooner you get in front of the problem, the more options you have and the easier it will be to avoid foreclosure. A company like Shona Buys Houses moves faster than someone looking for their next home. We also have many creative options to help out home owners and increase the speed of closing. You can then walk away from the property without worrying about a foreclosure ruining your credit. If you are facing a foreclosure, then don’t hesitate to fill out our no-obligation quote form and find out your options.