Some people think that instead of avoiding foreclosure, refinance is considered a better option. This is considered a wise idea, if there is equity in your home and if you refinance before your credit is hurt from the missed payments. But if you notice most of the homeowners do not come across this situation. Most of the foreclosure victims have very poor credit and no equity. So majority of people face foreclosure and waste valuable time trying to find a foreclosure loan.
One of the best solutions is to speak about loan modification with your current lender. At this time, your existing mortgages are altered to produce a lower monthly payment. In such situations, interest rate is lowered and the term of the loan is re-amortized to a 30 year fixed rate. In certain circumstances, principal amount is even lowered to reach the target payment.
In certain situations, if you speak to your financial institution about loan modification it will work. But the best thing would be to hire a professional negotiator who can speak on your behalf. While hiring a professional, do not pay cash up front, or if you do, place the amount into an escrow account until the process is complete. If there are no results, you don't have to pay for their efforts. New laws can protect borrowers, but criminals will be ready to steal you money if you give them a chance.
When negotiating with your financial institution, you have to complete a loss mitigation package when attempting your loan modification. You should submit a package that can be approved first time around. You have to show proof of income, as you did when you obtained the original loan. Generally lenders will see whether or not things have changed with you personal finances.
Due to recession, price of your home may have reduced and you are upside down in your loan, then you may decide if keeping your property is even the best decision. When you are not able to pay your mortgage amount, short sale may be the best option. A short sale is when the property is sold for less than the payoff amount and the bank forgives the difference.
Whatever you decide it is important that you have choices and allowing the home to go to foreclosure is rarely a good idea. Due to this, your credit will be affected which may create difficulty while buying a new home. Be brave, if needed ask for help or retain a professional to help you through these rough times.
As far as possible, never avoid your mortgage payment. It is important that you pay your mortgages regularly. But if you come to know before 2 months, that you will be not able to pay mortgage in the future speak to your lender.
