Repayment Options & Foreclosure Alternatives
When you get behind on your mortgage payment, your lender will eventually send you a notice of default. If you do nothing, the lender will work towards foreclosing on your house. If you would prefer not to go through foreclosure, you can pursue a number of different repayment plans and foreclosure alternatives.
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Repayment Plan
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If you have missed a payment or two on your mortgage, you might be able to talk to your lender about setting up a repayment plan. With this type of plan, you can negotiate a certain amount of money that you pay extra each month to get caught back up again. You might take the payments you missed and divide them by 12. Then you could pay that extra amount on top of your existing payment every month, and continue until you are current.
Short Sale
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One of the alternatives to foreclosure that you could pursue is a short sale. With a short sale, you try to find a buyer for the house that is willing to purchase quickly. The buyer makes an offer and you take that offer to the bank. The offer is typically less than what you owe on the mortgage balance. If the lender takes the offer, they can forgive the remainder of what you owe and you would then move out of the property.
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Deed-In-Lieu Of Foreclosure
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Using a deed-in-lieu of foreclosure is another option that you could consider. With this option, you voluntarily give the deed to the house back to the lender without forcing them to take it through foreclosure. When you use a deed-in-lieu of foreclosure, you get the process over quicker---giving you a head start on rebuilding your credit.
Government Help
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The government also has a few programs that you could potentially use to help avoid foreclosure. For example, the Home Affordable Foreclosure Alternatives program, or HAFA, is a program that helps you to lower your options outside of foreclosure. They will provide financial incentives to banks to facilitate a short sale or a deed-in-lieu of foreclosure. If your bank is unwilling to work with you normally, they might be enticed to do so if you work with this program instead.
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