6 Alternatives to Foreclosure
By Brenner Spiller & Archer | June 15, 2020
Foreclosure is a term that’s plagued with financial and social stigma and it brings to mind struggle, irresponsibility and loss. But though it has this stigma, many don’t realize that foreclosure could really happen to anyone. Anything from an unexpected loss in the family to prolonged unemployment, or even a sudden illness could lead to a financial situation that leaves people struggling to keep their homes.
As if a foreclosure wasn’t bad enough, it can also wreak havoc on a homeowner’s credit score, making for an ugly financial situation. The good news is that there are at least six alternatives to foreclosure:
Talk to Your Lender about Loan Modification
As with most bills, a lot of financial situations could be remedied by simply being honest with your lender. If you have missed payments and trouble paying, talk to your lender about a loan modification. Though you must qualify depending on their standards, a loan modification could mean a lower interest rate, a longer amount of time to pay, and of course lower payments.
Rent Out a Room or the Property
It seems like an obvious action to take, but it’s an alternative that’s often overlooked. If a homeowner is having trouble paying the mortgage, it may be worthwhile to make use of extra space in the home and rent out a room to a tenant. If this isn’t possible, it may be worthwhile to rent out the entire property – this way, most of the mortgage gets covered while the homeowner seeks a more affordable place to live.
If you have a good or even passable credit rating and enough equity in the home, refinancing is a good option to at least look into. Refinancing can bring with it a better rate, no matter how slight, and in turn bring more affordable payments.
Also known as a payment plan, forbearance is an arrangement that allows you to work out a temporary payment plan with your lender. It’s also known as a hardship program – in these cases, the payments may be lowered or stopped altogether to allow a homeowner to catch up.
A “friendly foreclosure” is just another term for a process called a “deed-in-lieu.” It’s fairly straightforward on paper: rather than allow the bank to foreclose your home, you would return the deed of the home on your own volition.
The most common route taken by those facing foreclosure, a short sale is just that: selling the house for less than what is owed under approved parameters to get out of paying more than the home is worth. The impact to your credit is still there but can be significantly lower than foreclosure and friendly foreclosure.
Our Experienced, Friendly Debt Attorneys Can Help Save Your Home
Your home is your castle. It’s likely the largest investment you’ve ever made and it’s the place where you and your family feel safe. However, when unmanageable debt threatens your home, it’s completely understandable if you feel overwhelmed and frustrated. The mortgage company wants its payments and when a homeowner gets into significant arrears, it can be very difficult to avoid foreclosure.
However, all hope is not lost. At the law firm of Brenner Spiller & Archer, we care about our clients and have helped countless homeowners in South Jersey remain in their homes through a variety of methods. Contact our West Berlin, NJ office today to speak with an experienced, friendly lawyer who will explain your rights and options, answer all of your questions, and do what’s necessary to save your home.