With record numbers of foreclosures, high unemployment rates and a struggling economy, many homeowners are looking for debt relief. Some of them are even facing the loss of a home. However, homeowners who are struggling to hold on to the family home do have options that could help them fight foreclosure.
The first step for a homeowner struggling with payments should always be to contact the lender at the earliest opportunity. Communication with the lender allows the homeowner to learn the lender’s stance and possibly receive some help or forgiveness of payments. With so many mortgagees defaulting, lenders are eager to work with any homeowners who have a hope of catching up on payments. It may be possible for a homeowner to refinance on more favorable terms or to apply for a loan modification that changes the interest rate, monthly payment or both.
Of course, the homeowner can also sell, assuming a buyer can be found. Some homeowners are taking advantage of short sell offers or giving the bank back the deed to the house in a “break even” deal. Both of these options have tax implications, however, and should only be used with the understanding of how it will affect the person involved.
Finally, bankruptcy may be an option to keep the homeowner in the home longer and to negotiate with the lender for an adjustment to interest rates. Obviously, filing for bankruptcy is a serious step; experienced bankruptcy attorneys can advise people who are considering this option.
Source: GoBankingRates.com, “When You Can’t Afford Your Mortgage, You Only Have Six Real Options Left,” Tara Struyk, Oct. 30, 2012