how to avoid foreclosure in 2021
Are you wondering how to avoid foreclosure in 2021?
Well, there are a few options in this letter that might help you avoid foreclosure in 2021.
Even though the eviction and foreclosure moratorium on federally-backed mortgages was extended since January 2021, it is known to soon hit up again by the end of August.
This means more and more homeowners under foreclosure moratorium might lose their homes this year when the extension or forbearance period comes to an end.
It could even be worse for those not on federally-backed mortgages.
However today, these tips below might help you avoid foreclosure if you act fast enough.
Avoid Foreclosure: What is in this Letter?
In summary, if you want to avoid foreclosure and keep your home, you will have to qualify for the following options:
- Loan modification
- Reinstating your loan
- Repayment plan
However, if you want to avoid foreclosure, protect your credit but give up your house, here are a few working options that might come in handy:
- A Short sale
- A Deed in lieu of foreclosure
- Getting help from someone who buys homes in foreclosure
Consider the following options if the dreaded foreclosure is slowly creeping on you.
Consider a Repayment Plan
For a repayment plan to work, you have to pay all your current monthly mortgage amount plus any extra overdue.
This plan usually is effective because anyone who is not too far behind in their payments when they apply for a repayment plan can easily qualify.
Your lender will give you a specific time to complete the repayment plan, usually between six or nine months, depending on your situation.
Consider a Forbearance Agreement
In layman’s terms, a forbearance is like ‘forgiveness’.
Your lender forgives your mortgage payments for a specific period of time; it could be longer depending on your situation.
In another scenario, your lender reduces your mortgage payments for a specific period of time, which could be longer depending on your situation.
Even though entering into a forbearance agreement is a very rare case, it’s worth a try.
You’ll have to make a compelling case for yourself by convincing your lender that you’ll be able to resume your payments soon.
If by any stroke of luck you manage to succeed in your plea, one of two things will be triggered:
- You’ll resume your payments soon but with slightly modified (increased) rates
- You might be asked to make a lump sum deposit to make up for a huge portion of your missed payments and get current faster.
Reinstate Your Loan
To reinstate your loan means that you make up all the missed payments which include principal, interest, and any other expenses connected to the loan.
Obviously, this option only works if you have enough money.
But since you’re trying to avoid foreclosure, it means you’re running low on cash; therefore, you might not have enough money as per se.
However, there are two things that can be done about this.
State law always gives homeowners a specific amount of time to reinstate their loans.
Secondly, you can talk to your lender and negotiate to have more time added for you to reinstate.
Usually, 9/10 times your lender will agree to it since just like you, they don’t like going through with a foreclosure.
So they’ll gladly work with you to find a lasting solution such that you can continue paying your mortgage and avoid foreclosure.
A win-win for everyone!
Arrange for a Loan Modification
A loan modification can be very effective.
If you’re starting to get behind on your mortgage, don’t stay silent — speak to your lender.
A loan modification is a great getaway route you can easily take.
In a loan modification, the borrower tries to come to an agreement with the lender to have them adjust the terms of the loan, which include lowering the monthly payments, interest rate, an extension of years of the loan repayment period, and adjusting any other overdue amounts.
This can easily help you avoid foreclosure.
Refinance the Loan
In simple terms, refinancing the loan means you apply for another loan to pay off an already existing one.
So in an event where you’re trying to avoid foreclosure, this can help.
Unfortunately, refinancing can be near impossible if you have bad credit.
Other than that, you are fully backed by the state to redeem your mortgage through refinancing.
File for Chapter 7 or Chapter 13 Bankruptcy
Before filing for any kind of bankruptcy, especially during foreclosure, please consult with a bankruptcy lawyer to learn all that you need to.
One misconception that most people have is that filing for bankruptcy can stop foreclosure and help you save your house.
This isn’t entirely true.
A Chapter 13 bankruptcy might help you keep your home but not with a Chapter 7.
This is because a chapter 7 bankruptcy will only prolong the foreclosure for a few months.
It can only save your home if you’re current on your mortgage or don’t have that much equity in the house.
Consider a Short Sale
Sometimes it makes sense to give up the house and start a new chapter in your life.
Depending on your situation, you can choose an option that will bring in the least amount of stress for you and your loved ones.
In a short sale, you agree with your lender for the home to be sold for less than the mortgage balance.
If this goes through, you avoid foreclosure, and your lender gets back their money.
However, a short sale might end up in a deficiency.
For instance, if the short sale is agreed at $300,000, but you owe $350,000 on the mortgage balance, the $50,000 is a deficiency.
In this case, you need to come to an agreement with your lender that they shall not pursue you in court for this deficiency after a short sale.
Even though your lender agrees to this, you might face tax consequences from the IRS.
Surrender the House In a Deed in Lieu of Foreclosure
In contrast to a short sale, a deed in lieu of foreclosure is when you simply surrender the house to your lender.
In so doing, no foreclosure takes place.
And just like a short sale, you need to agree with your lender that they won’t be pursuing you in court in case of any deficiency when the home is sold.
Unfortunately, you might be faced with tax consequences from the IRS as well.
Also, a deed in lieu of foreclosure won’t work if you have more than one loan on your home.
Getting Real Help To Avoid Foreclosure
If you’re facing foreclosure in San Antonio, the above options can help you.
However, if you don’t have the time and energy to maneuver through these options, we can help.
We can help take your stress away and give you a real chance at starting over on a clean slate with no bad credit — but a pocket full of cash.
We are Capital Realty Investments, and we buy houses in foreclosure — any price, any condition, and pay cash.
Whatever your situation, we will listen and make an offer immediately after examining your property.
Avoid foreclosure in San Antonio today by giving us a call, and let us make an offer for your house.
Call now: 210-797-7653