Q: If Faced with Foreclosure, What
Are My Options?
A: Talk with your lender
immediately. The lender may be able to arrange a repayment plan or the
temporary reduction or suspension of your payment, particularly if your income
has dropped substantially or expenses have shot up beyond your control.
You also may be able to refinance the debt or extend the term of your
mortgage loan. In almost every case, you will likely be able to work out
some kind of deal that will avert foreclosure.
If you have mortgage insurance, the
insurer may also be interested in helping you. The company can
temporarily pay the mortgage until you get back on your feet and are able to
repay their “loan.”
If your money problems are long
term, the lender may suggest that you sell the property, which will allow you
to avoid foreclosure and protect your credit record.
As a last resort, you could consider
a deed-in-lieu of foreclosure. This is where you voluntarily “give back”
your property to the lender. While this will not save your house, it is
not as damaging to your credit rating as a foreclosure. Exhaust all other
viable options before making a decision.