What Are My Options If My House is Foreclosed On?
Foreclosure is the legal procedure that occurs when a lender begins the process of repossessing a house. This occurs when the borrower defaults on his obligations to the lender--usually a failure to make mortgage payments over a period of months. Here are your options if you're in this situation:
Other People Are Reading
-
Refinance
-
Refinancing is one way to stop the foreclosure process, but this is not an option for everyone. Many people find they owe more than their house is worth, or their credit has suffered too much to obtain a new mortgage.
Selling
-
Selling your house is another option. Many people facing foreclosure have turned to short sells, or selling their house for the balance of their mortgage. While this leaves the homeowner with no money or asset, it does keep the lender from foreclosing and keeps their credit intact. You can sell through an agent or to an investor.
-
Deed in Lieu of Foreclosure
-
Negotiate to voluntarily give the property back to the lender. This is less damaging to your credit than foreclosure and better for the lender because it's less costly than foreclosure. In order to do this, the indebtedness must be secured by the real estate being transferred and both parties must agree to it.
Bankruptcy
-
If all else fails, bankruptcy is an option. It can have devastating consequences to your credit, but if you're in this situation, your credit is probably damaged already. New laws make it tougher to file, but if you can, a bankruptcy will automatically halt collection activity and postpone a foreclosure sale, if one is pending.
Ignore It
-
If you do nothing, the home will be repossessed and auctioned. In many cases, the auction price will not cover the balance owed on the mortgage. The lender can then sue you for the balance.
-
