Home Foreclosures: The Different Financing Options
Dealing with foreclosure can be overwhelming, and the number of options available for you to consider can only add to the confusion. If you are facing the possibility of foreclosure, here’s an overview of the different foreclosure loan options available to you:
- Personal loan: A personal loan is a way to borrow money using your home as collateral. You can use the money from the loan to pay off your mortgage, but you’ll still owe the lender the money you borrowed. If your situation improves and you can eventually repay the loan with interest, then this might be an option for you.
- Short sale: A short sale is when your lender agrees to let you sell your house for less than what you owe on it and forgive the rest of your mortgage debt. The lender still has to go through the process of selling the home, but this usually means they won’t have to take it back from you or let it sit empty while they try to sell it. In most cases, this will be your best bet at getting out from under your debt without losing your house completely.
- Loan Modification: A loan modification involves lowering interest rates or extending the length of payments in order to make monthly payments more manageable.
- Home Affordable Refinance Program (HARP): This program is designed to help homeowners refinance their mortgage at lower interest rates and avoid foreclosure by reducing monthly payments or changing mortgage terms such as repayment period or other fees associated with refinancing loans.
- Deed in lieu of foreclosure: If a short sale isn’t an option for you because of your financial situation or because the bank doesn’t want one, then a deed in lieu might be an alternative way out of foreclosure. This allows homeowners who have defaulted on their mortgages to transfer ownership of their home directly to the lender in exchange for avoiding foreclosure proceedings.
Should this happen to you, don’t panic: there are a number of options available to help you – from refinancing your current mortgage to having the bank pay for your home’s repairs. Or maybe you’d be better off selling your house to a real estate investor and moving on to something smaller. Regardless of the option(s) you choose, make sure that you don’t jump into anything without thoroughly reading the fine print first. Good luck!
Monica Davis, Operations Manager for Home Savers Community Group. Specializing in assisting property owners with saving their home with a property tax loan.