No homeowner wants to fall behind on their mortgage, but sometimes unexpected life circumstances can make it difficult or impossible to keep up with payments. Foreclosure is an extremely common phenomenon, according to SpendMeNot, reporting that there were more than 214,000 active foreclosure cases in the U.S. in 2020. Fortunately, there are several paths a person can take to stop foreclosure. Here are four different foreclosure relief methods to consider.
The simplest way to stop a foreclosure is through loss mitigation. Loss mitigation simply means getting up to date on one’s payments without accruing more debt. Some banks offer loan modifications as a method of loss mitigation. A loan modification changes the terms of a loan to make it easier to repay, usually by extending the length of the loan.
If you’re willing to part with your home to avoid the negative financial impact of foreclosure, you can sell the property to pay off your debt. There are two main ways to do this. You can either sell the home to the bank to receive a deed in lieu of foreclosure or sell the home in a short sale with the bank’s approval. In a short sale, you sell your home for less than the amount you owe on it, and the bank forgives your debt in return for the proceeds of the sale.
By filing for Chapter 13 bankruptcy, you can use a repayment plan to continue paying off your mortgage. This repayment plan usually comes with a term length of three to five years. If you adhere to your repayment plan, your debts will be discharged. While bankruptcy will negatively affect your credit, this impact is usually less severe than that of foreclosure, and it enables you to keep your home.
With a refinance, you transfer your debts to a new mortgage. Your bank may give you the option of doing a short refinance, in which they give you a new loan worth less than the amount you currently owe and forgive the difference. Alternatively, you can refinance with a hard money loan, which is provided by a private lender.
If you need assistance in preventing foreclosure in New York, Sandyford Resources can help you explore your options. Our free program provides you with several strategies to avoid foreclosure and save your home. Contact us today to get started.