Depending on your circumstances it may not be possible to keep your home. But there are still options available to you including to prevent foreclosure:
- Short Sale or Short Payoff: In cases where you sell your home for less than you owe, your lender may accept the lesser amount.
- Deed-in-lieu of foreclosure: Your lender may accept the voluntary transfer of the title of your home back to them in exchange for cancellation of your mortgage debt. This approach may have tax implications for you, and it may not be possible if there are other liens against your home.
- Assumption: This option permits a qualified buyer to take over your mortgage debt and the mortgage payments, even if the mortgage was originally non-assumable.
There are other alternatives to foreclosure. By working with your lender you can determine if you are eligible for any of the following workout options:
- Refinance: If you have enough equity in your home, your new mortgage could pay off the old loan along with any late fees and attorney fees. If you decide to pursue a refinance, remember to shop around for the best terms and compare the Annual Percentage
- Reinstatement: Your lender may agree to let you pay the total amount you are behind, in a lump sum payment and by a specific date. This is often combined with forbearance when you can show that funds from a bonus, tax refund, or other source will become available at a specific time in the future. Be aware that there may be late fees and other costs associated with a reinstatement plan.
- Forbearance: Your lender may offer a temporary reduction or suspension of your mortgage payments while you get back on your feet. Forbearance is often combined with a reinstatement or a repayment plan to pay off the missed or reduced mortgage payments.
- Repayment Plan: This is an agreement that gives you a fixed amount of time to repay the amount you are behind by combining a portion of what is past due with your regular monthly payment. At the end of the repayment period you have gradually paid back the amount of your mortgage that was delinquent.
- Loan modification: This is a written agreement between you and your mortgage company that permanently changes one or more of the original terms of your note to make the payments more affordable.
Be aware that some workout options affect your credit rating more than others. Foreclosures, short sales and deeds-in-lieu of foreclosure are considered "not paid as agreed" and may have serious negative impact on your credit score.
That is why it is important for you to get help early to try to prevent further damage to your credit. For more information about your credit and how alternatives to foreclosure may affect it, visit www.myfico.com
