You have missed several mortgage payments due to reasons beyond your control such as health issues or job loss, for example. The bank is talking about possible foreclosure on your home in South Florida. How can you prevent foreclosure from happening?
First of all, get a hold of yourself and don’t panic. You may have assets you haven’t thought about to make your payments. Think about if you have life insurance, unemployment insurance and any money in savings or investments. Do you have a disability policy you took out at work and forgot about? Add up your sources of income. Slash your household budget down to the bone. You won’t die without cable and cellphones. If you have a second car or a luxury car, trade them in for cash. See if you can tap your IRA fund, but know there may be penalties if you do. Ask for help from your family, friends or religious organizations.
You’ll have to contact your lender as soon as possible too. Don’t put it off. Sometimes the lender will work with you. They may be able to modify your mortgage for a lesser payment. Once choice which you may want to think about is where you deed-in-lieu of foreclosure. Here lender takes back the title to your property and releases you from your mortgage. Another option is a claim advance. Here, if you purchased your home with less than 20% down, then you have private mortgage insurance or the loan will be self-insured by the lender. In either case, the private insurance company may provide you a cash advance so your loan is current. If your loan is through FHA, they may be able to help you with advice and assistance.
You may qualify for forbearance too. This changes the mortgage terms temporarily and will allow you to skip a payment. It may also allow you a year, sometimes less, to make smaller payments on your mortgage. And some mortgage companies will permit reinstatement when you have missed 2 or 3 payments even up to the final stages of foreclosure. When a reinstatement occurs, you have to pay late fees; any other costs, and brings your loan account current.
A final option where you keep control of your fate is to sell your property if possible. If the situation is something you can’t get out from under, it’s better to sell the property outright. You’ll get a better price and preserve your credit. You need to be realistic. If you’re going to lose the house through foreclosure, then in selling your home, you will have some control over the situation, save your credit and maybe have enough money left over to make a new start.