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Foreclosure Prevention

Ways to Avoid a Foreclosure

Ways to Avoid a Foreclosure

Ways to Avoid a Foreclosure

While going through a foreclosure, if you don’t want to keep the home, you should still try to avoid foreclosure since, it will not only harm your credit but, you could still owe the mortgage company a deficiency for the unpaid mortgage balance making you ineligible for a mortgage for the next coming years. The biggest mistake people make is to not take any action until it’s too late. Usually, they are not aware of other options and they don’t want to deal with the mortgage company. At the same time, mortgage companies do not like foreclosures, since they are expensive and time consuming for them. For that reason, they may be willing to work something out. Here are some things to consider:

If you don’t want to keep the home:

Step one, consult United Financial Counselors and bring any paperwork that you may have received from the bank. Step two: you may want to consult a local appraiser or real estate agent and visit online sites for an up-to-date estimate of how much your home might be sold for. Many real estate markets have started recovering so you may find yourself fortunate enough to no longer be underwater (don’t forget to subtract the costs of property improvements, closing costs and real estate agent commissions). In that case, you can simply sell the home and pocket any gains you make.

In another aspect, there are a couple of possible solutions that you might be able to work out with United Financial and your mortgage company to avoid foreclosure. One, is a short sale, in which you sell the home for less than the mortgage balance and the lender agrees to accept the sale proceeds as full payment for the mortgage. If the lender won’t agree to it or if you can’t find a buyer for your short sale, you may be able to negotiate a “deed-in-lieu of foreclosure,” in which you simply give the property to the lender in exchange for them cancelling the mortgage loan.

Both of these options can hurt your credit less than a foreclosure and can wipe away your mortgage balance. However, there are a few things to be aware of. First, make sure that the lender is actually forgiving the full amount of the mortgage deficiency. If the contract seems at all unclear, consider hiring a real estate attorney to review it. Legal fees are a bargain compared to discovering that you still owe the mortgage company money because you didn’t understand the contract.

The second option is talking to our Counselors about a loan modification. In this process, Uniter Financial will sit down with you one on one to go over your income and expenses. We will compile the documents for you and submit them to the bank. We will follow up on a weekly basis so that we can provide you with a status update on the file. Loan modifications can include interest rate reductions, a decrease in monthly payments, and sometimes a principle reduction.

Feel free to know more from us by calling at 877-509-3160 and speaking to Jason Walowitz.