How to Get Out of Foreclosure
Maybe you've been out of work and your bills are piling up. You've got a new job now, but you're so far behind that you can't tell if there's any light at the end of the tunnel. How do you get out of foreclosure and save your house? Follow the tips in this article and you'll be on the right track.
Talk to Your Lender Before They Foreclose
The first thing you should do is talk to your lender. Explain your situation and see if there is anything they can do to help you get caught up. Some lenders will move a payment or two to the end of your mortgage or let you pay the past due amount over a period of two or more months.
Not all banks are willing to work with borrowers who have fallen behind on their payments, but some are, so it's definitely worth asking. You are likely to have better luck if you call your lender as soon as you know you are going to be late, but even if you are already behind by a payment or two, your lender may still be willing to work with you, especially if they haven't already begun formal foreclosure proceedings.
Decide Whether You Can Realistically Afford the House
Before you worry too much about how to get out of foreclosure, you need to address another issue: Can you really afford the house? If your payments are too high, you are likely to find yourself right back in the same situation again unless your income increases or your house payment goes down permanently.
A lot of people have gotten suckered into buying more house than they can really afford. After all, if the bank says you can afford it, it must be true, right? Sit down and examine your income and expenses carefully before deciding whether to try to save your house from foreclosure. If you are going to lose the house anyhow, it is better to accept that fact early on in the process so you have time to start saving money for moving expenses.
Yes, it is difficult to let go of a home you love, but your financial situation will be much stronger in the end if you can find a place that doesn't put such a strain on your budget.
Ways to Get Out of Foreclosure
Your options for getting out of foreclosure are limited by many factors: the amount you are behind, the stage of the foreclosure process, and the assets you have available among them. Here are some things you might be able to do to stop or stall the foreclosure process.
Pay your back payments. Whether you can do this or not depends on the stage of the foreclosure process as well as whether you can come up with the money. In most states, once the sale date has been set for the auction, you can no longer stop foreclosure by paying the late payments. At this point, you must pay the entire loan balance plus court costs and legal fees.
Refinance your house. Sometimes it is possible to refinance your mortgage to prevent foreclosure, but this is much easier before you fall behind. If you have a high interest rate, getting a new mortgage with a lower rate can make your house payments affordable, enabling you to keep your home.
Bankruptcy. Filing for bankruptcy usually just stalls the foreclosure. However, if you file for Chapter 13 bankruptcy and choose to include the house, it is possible that you might be able to keep it. However, you will still have to catch up on the payments and keep them up.
Loan modification. This is just a fancy name for talking to your lender and trying to get them to work with you. There is a government loan modification program, but it still requires an agreement with your lender.
Sell your house. If you can find a buyer who is willing to pay enough to cover everything you owe your lender plus closing costs (assuming you don't have the money for closing), then you can sell your house. You won't get to keep it, but you won't have a foreclosure on your record as long as the sale closes in time.
Short sale. Sell your house for less than you owe, and convince your lender to accept the sale amount as full payment on the mortgage. This is difficult to do, but not impossible.