Facing foreclose is a scary prospect. You are about to be removed from the home that you have worked so hard for and have taken care of, in some cases, for many years. Many foreclosures stem from circumstances beyond the homeowner’s control, like being laid off from their job or an extended illness that reduced their ability to make money to make their mortgage payment. When facing foreclosure, one of the things that you should focus on is trying to limit your losses as much as possible. While this may be the end of living in that particular home, it will not be the end of your life and you should plan on beginning to rebuild your life right away.
Communicate With Your Lender
When facing foreclosure, it is important that you talk to your lender and let them know about your financial situation as soon as you can. While it may be embarrassing to disclose to a stranger the difficulties that you are having financially, they may have some programs available for distressed borrowers to help them stay in their homes longer. They may also be able to waive some of the fees that are typically charged to delinquent accounts to reduce the balance you must eventually pay. Communication with the lender can make the foreclosure process much less painful for you.
See If You Can Sell The Home
IF the payments on the home have become unaffordable, your best option may be to try to sell the home to another party and use that money to pay off the remaining amount of the mortgage you owe to the lender. While you will still be losing the home to someone else, you will be in a much better position financially because you will have eliminated the enormous mortgage payment that was draining your finances and you will not have a foreclosure on your credit report to prevent you from buying another home in the future. Losing the money that was put into the home will be a difficult loss, but if you manage your money carefully, you may be able to purchase another home within a few years of losing this one.
Underwater Homes
Dealing with an unaffordable home that is underwater is more difficult to save from foreclosure. The lender may not allow you to sell the home because you would be selling the home at a significant loss, which means that the lender will lose out on a significant amount of money. If the lender does allow you to sell the home, you may still be on the hook for paying the difference between the amount that the home was sold for and the amount that you still owed to the lender. In this case, you would still be making payments for a house that you are not living in for long after someone else has taken up residence in your old home.
Join our newsletter
Subscribe to get the latest "Engineer Your Finances" content via email.
Leave a Reply