Alternatives to Foreclosure
In some circumstances, it might make sense to renegotiate the mortgage terms. Lenders are usually more willing to consider this option if the homeowner is facing a temporary decrease in income and has a strong likelihood of an increased income again in the near future. For those homeowners, a lender might be willing to lower the interest rate on the mortgage or extend the length of the mortgage in order to lower the monthly payments.
Depending on your financial circumstances, you might be able to refinance your home. If you have equity in your house you might be able to borrow money from that equity in order to pay past due mortgage amounts. The interest rate on the new loan might be lower than your original mortgage rate and you might end up with smaller monthly payments going forward.
The federal or state government might be able to provide you with assistance if you wish to stay in your home and you qualify for their programs. If you have an FHA insured loan, for example, your lender may be able to get a one a time payment from the FHA insurance fund that will bring your mortgage payments up to date. Similarly, some states have homeowners’ mortgage assistance programs that can provide assistance to homeowners who wish to remain in their home and avoid foreclosure.
Sell or Transfer Ownership - Regular Sale or "Short Sale"
If you do not wish to remain in the home and you are facing foreclosure then you have a few options available to you. All of these options are less likely to affect your credit rating to the same degree that a foreclosure would affect it. For example, you could try to sell your home. Depending on the amount of your mortgage, you might receive enough from the sale to pay off your existing debt and have some profit. If you can only sell your home for less than what you owe on it, your lender might agree to it anyway - this is called a "short sale."
The information on this page is meant to provide a general overview of the law. The laws in your state and/or city may deviate significantly from those described here. If you have specific questions related to your situation you should speak with a local attorney.
Additional Foreclosure and Alternatives Articles
- A Homeowner's Rights During Foreclosure
- How To Avoid Foreclosure
- The Mortgage Forgiveness Debt Relief Act of 2007
- Can I Use a Loan Modification Program in Order to Save my Home from Foreclosure?
- Renters Now Protected in Foreclosures
- Foreclosure & Strategic Default (Walking Away)
- What are Credit Counseling Agencies?
- Foreclosure Protection for Victims of Hurricane Sandy
- Different Types of Foreclosure
- How Can a Creditor Repossess Property?
- The Foreclosure Timeline
- Defenses to Repossession
- Understanding the Foreclosure Process
- A Plain Language Explanation of Your Options for Avoiding Foreclosure
- What to do About Your Mortgage When You're Facing Money Problems
- Bankruptcy or Foreclosure?
- Ten Tips for Avoiding Foreclosure
- Foreclosure Laws in Hawaii
- Foreclosure: An Overview
- How do creditors get paid when foreclosing on a house to satisfy unpaid debts?
- What is acceleration?
- I've fallen on bad times and am having trouble paying my mortgage. What should I do?
- Who is eligible for a short sale under the Making Home Affordable Foreclosure Alternatives Program?
- What can a creditor do if a debtor won't pay?
- What is the Hope for Homeowner's Act?
- What is the Truth In Lending Act?
- What Is a money judgment?
- I'm in foreclosure... can refinancing under FHASecure still help me?
- What is the FHASecure refinancing program?
- Are homeowners with interest only mortgages eligible for an FHASecure refinance?
- What are the requirements for an FHA Streamlined Mortgage Refinance?
- What kinds of streamline refinances do lenders offer?
- What is Judicial Foreclosure?
- What is a Power of Sale Foreclosure?
- What is Strict Foreclosure?
State Foreclosure and Alternatives Articles
- District of Columbia
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina