When it comes to foreclosure, your thoughts might be immediate doom and gloom about losing your home. Fortunately, some options exist to either extend how long you can stay in the home or even avoid foreclosure. None is easy and some will cost money you may not have. The key is to use your time as wisely as possible.
Length of Foreclosure
Home Foreclosure Myths says that when you get a notice of foreclosure, it doesn’t mean you have to leave right away. Fortunately for beleaguered homeowners, most states' foreclosure processes are quite convoluted and can take six months or more. Debtworkout.com says this will vary depending on whether the banks and courts expedite your case. Even after the house is foreclosed and sold at auction, you can still stay in the house until the new owner decides to evict you. You can also stay if the new owner agrees to let you rent the house.
While this can sometimes be a risky maneuver to stay in your foreclosed home before an auction, it’s one of the best options. Find a reputable mortgage broker and determine how much equity you have in your home. If you have roughly 60 to 70 percent equity, the broker might be able to refinance your mortgage and pay it off. The risky part is that you may have to pay a high interest rate and fees because of your late payments leading up to the foreclosure notice.
Chapter 13 Bankruptcy
You can have the foreclosure canceled if you file for bankruptcy, even at the last minute. By law, if you have a means to pay back your mortgage loan, the foreclosure has to be stopped once bankruptcy is filed. The best method is Chapter 13, in which the bankruptcy court will let you pay back your lender in installment payments. Home Foreclosure Myths says a Chapter 7 bankruptcy will only work temporarily when dealing with a foreclosure due to the bank's security interest in your house. Through this method, the bank can still take your house after a bankruptcy. But that can also be averted based on the value of your house.
Reinstating a Mortgage
This method of keeping your foreclosed house is cited by debtworkout.com as a good option. But mortgage mitigation companies are sometimes shady, however, so use them with caution. If you decide to negotiate with your lender yourself, you might be able to reinstate your loan with more affordable payments. If the lender refuses to drop any of the unpaid debt on the loan, it can be added to the total and extended over a longer period to make it more manageable.