Preventing Foreclosure – Tips for Recession Strapped Homeowners
September 5, 2009 by Ben Casey
Filed under Credit Debt
Foreclosure will affect your life much longer than the actual process itself takes. The impact to your credit will remain for years after you’ve lost your home. Foreclosure is never a good option for homeowners who are falling behind on mortgage payments but, unfortunately, sometimes foreclosure becomes the only option.
You can still possibly prevent foreclosure if you are willing to be up front with your bank and let them know exactly where you stand financially when it looks like you’re going to default, or start missing payments. Loan modification is also a tool to help you recover from a close call, and involves adjusting the terms of your loan, such as interest rates and monthly payments, or could even mean adding missed payments to the tail of the mortgage.
Some banks, in the interest of avoiding foreclosures with their properties, will agree to sell a house quickly for less than its market value. This is called a short sale. It can stop foreclosure, but its probably more beneficial to the bank than it is to you. It acts very similarly to a foreclosure in terms of reducing your credit score, though a short sale will mean that you could be eligible to buy a home again much sooner.
If neither loan modification or short sale works, then there isn’t too many options remaining. Here is what you can expect to experience:
The bank sends out a Notice of Default after the first missed payment.
Then, the lender will begin contacting you and will accept even small payments to try and keep you current.
After 90 days, foreclosure begins to look unstoppable as the option for the bank to foreclose on your property opens up.
The property is then sold at a foreclosure auction. After the sale you have two options: Either leave at your own free will or wait for the Sheriff to come and evict you.
View how a credit attorney helped a local couple get qualified for a mortgage with a less than perfect credit by deleting charge offs and collection items. You can also visit creditforcouples.com to get a free credit repair letter or call 1-866-246-7311 for a free consultation with a credit expert.
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