The definitive guide to staying in your house if you are being foreclosed on
The short answer is YES but it will take some work. You can keep your house despite foreclosure. There are options!
Banks want you to stay in your home. They want you to pay the monthly mortgage. If they get their money they are happy.
If a bank is threatening to foreclose on you then that means that you have some time before it happens but you need to move quickly. Don’t wait.
You have options but first…
Foreclosure when I was a kid
Not too long ago I learned that when I was young my parents went 10 months without paying the mortgage due to simply not having the money to do so. Foreclosures happen to good people.
Though my parents were under the weight of the bank, I never knew about it at the time. I was a child so it makes sense that they didn’t tell me. I couldn’t imagine having to tell my kids.
If you are being foreclosed on, this does not make you irresponsible, irrational, or a terrible person.
So lets get to the question.
Can you stay in your house if you are being foreclosed on? Yes you can but not under the current terms.
The bank isn’t going to sit back and hope you start paying. After all they are in the business of lending money and receiving payments. It’s not even their money they are lending but the money of all the people who bank with them.
Foreclosure prevention options
So, you need to call your bank and ask them if they are willing to do a “loan modification.” In short, a loan modification is when you and the bank renegotiate the terms of the loan.
This could be a combination of a refinance plus a few other determinants. Each bank is different but call and ask. Most of the time they would rather work something out with you than foreclose. If they have to foreclose on the property, they run a big risk that they might not recoup the money they lent you.
If they lent you $100,000 but sold it after the foreclosure to something for $80,000 then they lost $20,000. They will usually work with you but be honest about the situation.
During COVID-19 a lot of banks were willing to offer a “deferment” period where a homeowner didn’t have to pay the mortgage for a couple of months.
After the set amount of months, you could either pay a large amount for the past months but most allowed, and still allow, you to take that amount for those months and move it to the end of the loan. So if your loan was for 30 years, then image now your loan is for 30 years and 4 months.
Currently, at the writing of this article, I am in the process of a loan deferment with my own personal house since the real estate market dried up during the initial stay-at-home orders for COVID-19 and my finances got pretty tight.
If you would like some help you with any of these options let me know and I am happy to help you out.
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