For many, living the American dream is the ultimate goal. This essentially means getting a good job, getting married, starting a family and owning a home. Homeownership is not simple feat though. It does not only mean paying a mortgage but any costs associated with upkeep. This can make homeownership very expensive, and when an individual or family finds it challenging to keep up with these costs, one might face losing their home.
Foreclosure is not an easy situation to deal with. This is the legal means for a lender to repossess a home if a homeowner becomes delinquent on the loan. While the foreclosure process might ensue at this time, it is vital to understand what alternatives to foreclosure exist. This could mean avoiding the difficult and lengthy process or even being able to keep one’s home.
One option is special forbearance. This is when a lender is able to arrange a repayment plan that is based on the homeowner’s financial situation. This option might even be able to provide a temporary reduction or suspension of payments. This is a likely option is one recently experienced a reduction in income or an increase in living expenses. Another option is mortgage modification. This means refinancing the debt owned and even extending the terms of the mortgage loan.
A third option is a partial claim. This is when a lender is able to obtain a one-time payment from the FHA insurance fund as a means to bring a homeowner current on their mortgage. Other options include a pre-foreclosure sale, which allows the homeowner to sell their home and avoid the foreclosure process, or a deed-in-lieu of foreclosure, which is essentially giving your property to the lender. This last option does not save your house but it will help you avoid damaging your credit rating.
Facing a potential foreclosure is a difficult predicament to be in. Thus, it is important that homeowners understand what his or her options are when faced with financial difficulties. This could be the difference between keeping or losing a home.