Owning a home is exciting, but being unable to pay for it in the future may lead to foreclosure. However, your mortgage lender may not simply ask you to leave. They will follow certain procedures, starting with sending you a notice of intent to foreclose.
What you do after receiving the notice will determine the subsequent procedures. Here is what to consider doing.
Receiving a foreclosure notice can be devastating. Many thoughts may run through your mind, and accordingly, you may make a wrong move. Thus, it will be best to stay calm to get a clear picture of what to do.
Understand your options
You can apply several defenses when your mortgage lender wants to resell your home. They include:
- Loan modification: If you can’t make the existing monthly payments, you can negotiate with your mortgage lender to modify them. They can reduce it and lengthen the terms of the mortgage. This may also change the interest rate.
- Short sale: You can sell your home for less than you owe on the mortgage, provided your mortgage lender agrees to it.
- A deed-in-lieu of foreclosure: You can transfer the ownership of the home to the mortgage lender and avoid the foreclosure process by signing a deed-in-lieu of foreclosure agreement. But this should be your last resort. It helps to fight for your home.
- Bankruptcy: Chapter 13 can sometimes disrupt a foreclosure and help you save your home through a long-term plan to catch up the overdue payments.
You may also protect yourself from foreclosure when buying a home by entering into a forbearance agreement with the mortgage lender. This contract limits them from starting the foreclosure process for a particular period when you fail to pay.
If your mortgage lender notifies you of a foreclosure, you should consider your defense options to protect your home.