Alternatives to Foreclosure – Your 7 Options

alternatives to foreclosure
alternatives to foreclosure

Foreclosure Is Not Your Only Option

Are there alternatives to foreclosure? Yes! Understanding your options is critical to making the best decision for you and your family. Don’t be paralyzed by the situation or pretend it will go away. There are alternatives to foreclosure. Learn about your options. Understand them, make a choice, and go with it. Act. Take action now and make that phone call, contact whomever you need to contact. The faster you act, the more and better options you will have.

Most of these options will harm your credit for seven to ten years. Given that each credit reporting agency uses different criteria and/or scoring methods, there are no hard and fast rules for how each affects your credit score. Also, remember that most lenders and employers use your credit score to assess your creditworthiness and reliability.

You’re probably aware that having bad credit can prevent you from getting loans or credit cards. Negative credit reports may also hinder your ability to find work. Many employers view bankruptcy as evidence of financial irresponsibility, making them wary of hiring you. If you have a job, this may not seem like a big deal, but if you lose your job within the next decade, having this on your credit report drastically reduces your chances of finding a new one.

If you are behind on your mortgage payments and cannot afford to catch up, here are some alternatives to foreclosure, along with their benefits and drawbacks.

1. Bankruptcy

• Only consider this option after consulting a qualified legal bankruptcy professional. Also, if you choose this option, give your attorney enough time to gather information and file court documents to stop foreclosure proceedings.

Pros

Bankruptcy generates a temporary hold on the foreclosure process as soon as court papers are filed.

Cons

• Bankruptcy can prevent you from getting a new mortgage for up to seven years. Filing for bankruptcy does not necessarily stop the foreclosure because the lender may restart it. In addition, filing bankruptcy can lower your credit score by 200–300 points and stay on your credit report for 7–10 years.

2. Sell your home to a relative or friend

This is a great alternative if you have a willing buyer.

Pros

• If it’s not a short sale, you can rent or lease it back. You won’t also have to leave your home or uproot your family.

Cons

• Talking about money issues with friends and family can be awkward. In addition, selling your home in less-than-ideal conditions may result in a loss of equity.

3. Sell your home to an investor

If you can locate a real estate investor eager to buy your house, then this is another great alternative.

Pros

• If the deal was not a short sale, you can rent or lease the house back. You also won’t have to relocate your family or leave your home.

Cons

• You risk losing any equity you have in your home if you sell under less-than-ideal conditions. Finding an interested investor is also challenging because most people like to buy the property and then rapidly sell it for a profit.

4. Sell your home on the open market

This is a good alternative if you have time to sell your house.

Pros

• If your home is worth more than your mortgage, you may be able to sell it quickly enough to pay off your mortgage and receive cash at closing.

Cons

• With so many available homes and so few qualified buyers, selling your home in this market might be tough. Moreover, if you are months behind on your mortgage payments, it can take up to six months for a realtor to secure a contract and consummate a deal. The cost of repairs and/or cosmetic touch-ups needed to sell your home may be out of your budget right now. In addition, you’ll need to move out of your house and find a new home for yourself and your family.

5. Refinance your mortgage

For those who can afford the new loan payments, refinancing their current mortgage may be a possibility.

Pros

By making timely payments on your new mortgage loan, you can keep your home and improve your credit.

Cons

Your mortgage lender may not be willing to refinance your mortgage if you are several months behind on your payments.

6. Loan modification

Try to negotiate a loan modification with your present lender to keep your home and prevent foreclosure. Contact the loss mitigation department and ask to speak with the loss mitigation professional.

Pros

• A loan modification allows you to keep your home while continuing to pay your present lender. Possible loan modifications include lowering payments, waiving some payments, paying only interest for a period of time, putting up short-term repayment plans to help you catch up, and adding current payments to the unpaid principal balance at the conclusion of your mortgage.

7. Forbearance

Forbearance is when your mortgage servicer or lender permits you to temporarily reduce or stop your mortgage payments. However, the reduced or paused payments must be repaid afterward. Not only that you have to repay the mortgage payment afterward, but also keep in mind that this is only a short-term solution.

Pros

• For a limited time, you make smaller payments while you attempt to better your financial status. You can also keep your home, and your current mortgage is not affected.

Cons

• After the forbearance agreement expires, you may find yourself back in the same scenario. Moreover, most lenders do not give forbearance arrangements to homeowners who are substantially behind on their payments. Also, forbearance does not fix long-term financial concerns.

Summary

There are alternatives to foreclosure. Whether you are behind your mortgage payment or you are already facing foreclosure, you have options. Consider the above alternatives to foreclosure or you can also save yourself the trouble by calling TMC Property Solutions at (817) 550-5069 Opt# 4 and we shall assist you in the shortest time possible to sell your house and avoid foreclosure in Fort Worth and the surrounding cities. However, to fast-track, the process, simply fill out our short form to give us more information about you and we’ll be in touch with you and help you find the best solution!

TMC Property Solutions is a Veteran owned business and has been helping families across the DFW Metroplex that work. We are an accredited business and A+ rated member of the Fort Worth BBB.

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