7 Ways You Can Avoid Foreclosure
Provided as an educational service by Richard Fonfrias, J.D. Chicago's Financial Rescue & Bankruptcy Lawyer Fonfrias Law Group, LLCOPTION #1: Refinance.
This means you receive a new loan at a lower interest rate or with other favorable terms, which makes your house payment easier to afford. However, note with mortgage refinancing, that banks will often add past due payments, fees and penalties, which means you might not save any money, but you will avoid foreclosure.
OPTION #2: Reinstatement.
This means you pay the total amount you owe, in one lump sum payment and by a specific date. This brings your mortgage current and allows you to avoid home foreclosure if you have a source of funds
OPTION #3: Repayment Plan.
This is where you pay your past-due payments along with your regular payments over a longer period of time. This gives you time to catch up on late mortgage payments without having to cough up a lot of money at once.
OPTION #4: Forbearance Plan.
This is where you pay smaller mortgage payments or no mortgage payments at all for a set amount of time. This gives you time to improve your finances and get back on your feet, thus avoiding house foreclosure. Banks won't usually accept a forbearance plan unless the amount you owe is small.
OPTION #5: Loan Modification.
This is where the mortgage lender changes the terms of your mortgage so it's more affordable for you after you successfully make reduced payments during a “trial period” of a few months. This is a permanent change in your mortgage so it becomes more affordable for you. Note, however, that your lender might start to foreclose while you're waiting for your loan modification.
OPTION #6: Short Sale.
This is where you sell your home and pay off a portion of your mortgage balance when you are “under water”, meaning that you owe more than your home is worth. This allows you to move from your home without going through a foreclosure. Still, you are responsible to the lender for the difference between the actual selling price and the balance due on your mortgage.
OPTION #7: Deed-in-Lieu of Foreclosure.
This is when you transfer your home's ownership to your mortgage lender. This avoids a foreclosure; however, you are still liable to the lender for the difference between the what you owe and the amount the bank receives from its sale.
For foreclosure help in the Chicago area, call Richard Fonfrias of the Fonfrias Law Group, a highly experience Chicago bankruptcy attorney who helps clients deal with financial problems, like avoiding foreclosure, bankruptcy, debt management and tax defense