How to Avoid a Foreclosure Auction
If you are facing a hardship such as unemployment, death in the family, chronic illness, or the birth of a child, you could be in danger of having your home foreclosed upon by the lender. Circumstances that involve less income or added expenses can strain the budget and possibly lead to foreclosure. To avoid foreclosure, there are steps you need to take. Exhausting all of your resources is one way to fight a foreclosure auction.
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Instructions
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Contact your mortgage lender. If you think you are in danger of falling past due or you have already fallen past due, always contact your mortgage lender. They may be able to help you remedy the problem. Give your lender all information they require and they will let you know if you qualify for a loan modification. A loan modification can lower your interest rate, lower your payment, and in some cases push some of your principal balance to the end of your loan. This means it does not have to be paid back until you are at the end of your contract. Discuss all possible solutions that will help you avoid a foreclosure auction.
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Find out how much money is needed. Ask your lender how much money is required to make your account current, just in case you don't qualify for a modification. This information gives you something to focus on. Ask the lender for the latest possible deadline that you can get them the money and stop your home from going to foreclosure auction. If your home goes to foreclosure and it's sold, you may be responsible for the remaining balance. This information will appear on your credit file for seven years. See if friends or relatives can help you bring your mortgage up-to-date.
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Ask the lender to accept a short sale if you don't qualify for a loan modification. A short sale occurs when the lender is willing to accept less than what is owed on the property from the borrower, through the sale of the property. This is less time consuming than a foreclosure and less damaging to your credit report. If the lender agrees, you will need some documentation such as income verification, tax statements, mortgage statements, debts owed, and other paperwork. The lender will try to work this transaction out because everyone will benefit. Contact a real estate attorney before a short sale is pursued, because you may still be responsible for any balance remaining after the home is sold. Make sure a short sale is in your best interest. There is a chance that a lender may use legal action to try to collect the balance owed.
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Tips & Warnings
A foreclosure or short sale can affect your ability to receive credit in the future.
