A foreclosure will effect your life and finances for a long while to come. Specifically, a foreclosure remains as a huge black mark on your credit reports for years. That, among other reasons, is why you should avoid a foreclosure, which is possible by negotiating with your mortgage lender.
To prevent a foreclosure keep in mind that the banker is making the decision on whether to proceed with the proceedings or give you another chance to make good on the note. That is why you will get better results by being upfront with your lender. Loan modification is the best remedy. You can adjust your interest rates and/or lower your monthly payment making your mortgage affordable.
Some mortgage lenders, would prefer to avoid foreclosures with their properties and will agree to sell a house quickly for less than its market value. This is called a short sale. It can stop foreclosure, but its probably more beneficial to the bank than it is to you. A short sale acts very similarly to a foreclosure in terms of reducing your credit score, which is something you should avoid if you care about your credit score. However, if you do elect to go through with a short sale, you can expect to be able to qualify for a new mortgage much sooner as compared to if you were foreclosed on.
If neither loan modification or short sale works, then there isn't too many options remaining. Here is what you can expect to experience:
After you miss the first payment you will get a Notice of Default in the mail.
Then, the lender will begin contacting you and will accept even small payments to try and keep you current.
After 90 days of missed payments the lawyers typically get involved.
The property is then sold at a foreclosure auction. After the sale you have two options: Either leave at your own free will or wait for the Sheriff to come and evict you.
To prevent a foreclosure keep in mind that the banker is making the decision on whether to proceed with the proceedings or give you another chance to make good on the note. That is why you will get better results by being upfront with your lender. Loan modification is the best remedy. You can adjust your interest rates and/or lower your monthly payment making your mortgage affordable.
Some mortgage lenders, would prefer to avoid foreclosures with their properties and will agree to sell a house quickly for less than its market value. This is called a short sale. It can stop foreclosure, but its probably more beneficial to the bank than it is to you. A short sale acts very similarly to a foreclosure in terms of reducing your credit score, which is something you should avoid if you care about your credit score. However, if you do elect to go through with a short sale, you can expect to be able to qualify for a new mortgage much sooner as compared to if you were foreclosed on.
If neither loan modification or short sale works, then there isn't too many options remaining. Here is what you can expect to experience:
After you miss the first payment you will get a Notice of Default in the mail.
Then, the lender will begin contacting you and will accept even small payments to try and keep you current.
After 90 days of missed payments the lawyers typically get involved.
The property is then sold at a foreclosure auction. After the sale you have two options: Either leave at your own free will or wait for the Sheriff to come and evict you.
About the Author:
View how a credit attorney helped a local couple get qualified for a mortgage with a less than perfect credit by deleting charge offs and collection items. You can also visit creditforcouples.com to get a free credit repair letter or call 1-866-246-7311 for a free consultation with a credit consultant.
