A foreclosure comes when you’re delinquent on your mortgage payments for an extended period of time. Typically, this is when you’re two-to-three months late on payments and haven’t taken any significant steps with the lender to get help.
It happens to a lot of people, and it can put you in an extremely difficult situation. The bank reclaims the house, and you’re not able to recoup your investment gains from the appreciation of the home.
It’s rough. The thing is, there are some alternatives to foreclosure that can help you get through the process a little easier. We’re going to discuss five options today, giving you some insight into how you might manage this situation.
1. Sell Your Home Fast
If you can manage to, thinking “I’m going to sell my house fast” might be the smartest move in this situation.
It’s difficult to think about selling your home for less than what it could be worth if you had the time to sell it, but you don’t have an alternative at this point if you want to avoid the painful process of foreclosure.
Selling your home quickly to a company is a great way to get the money to pay the mortgage off and move forward.
Another option to get cash in hand quickly is to refinance. Refinancing your mortgage allows you to get the value that has appreciated in your home in your pocket and take out another mortgage for the new value of the home.
This is a way to get an excess of cash to make your payments in with. You could use that lump sum to pay off a number of months of payments so that you can get back on your feet before payments begin again.
3. Take Out Another Loan
Finding a loan from a different institution could be one way to keep your home during this difficult time. While it’s not always a great idea to get into more debt, it might be the difference between keeping your family in their home and having to move out in a tough way.
4. Ask Loved Ones for Temporary Support
It’s not a great idea to borrow money from people in your life, either. That said, it’s necessary sometimes and the issues arise when someone borrows money that they don’t need and can’t ever pay back.
You’re in a tough situation, so it’s not out of the question for you to ask those who are a little more fortunate for a little help temporarily. Only do this if you can reasonably pay the person back in the future, though.
One way to ensure this is to enter into a signed agreement with the person you’re borrowing from.
5. Short Sale
A short sale is the ability to sell your home for less than the mortgage if the property values have dropped since you made the purchase.
This is an option that releases you from the mortgage without having to cover the entire amount. It’s only an option if your property value has dropped, though.
Need More Homeownership Help?
There’s a lot to understand when it comes to the alternatives to foreclosure. It’s best to have a clear understanding of all your options before moving forward, though.
Explore our site for more ideas and insights into the ideas listed above.