If you’re facing foreclosure, there are several options available to you that may help you avoid losing your home. Remember that this depends; for instance, if you want to keep your home, you might opt for a repayment agreement, forbearance, or loan modification. On the other hand, if you want to exit without necessarily going through a foreclosure, you can complete a short deed or sale instead of foreclosure. There is also a possibility that the Government backs or owns your loan, and this can qualify for a special workout option. Here are some potential options to consider.

Loan Modification

This is an agreement between the buyer and the seller to modify the initial loan agreement, usually to lower the monthly payment, reduce your interest rate or extend the term of your loan.

Refinance

You could also refinance your mortgage with a new lender, which could lower your monthly payments and help you avoid foreclosure. Or if you can refinance at a better rate and then pay off your old loan, then starting fresh would be the best option. Some states give you the right to redemption. Refinancing might be tricky if you have a pending foreclosure or bad credit due to many pending payments.

Deed in Lieu of Foreclosure

In this option, the borrower voluntarily transfers the property’s deed back to the lender in exchange for relief from the mortgage debt and for avoiding foreclosure. This option is less damaging financially than going through foreclosure.

Forbearance Agreement

A forbearance agreement allows the lender to temporarily suspend or reduce your mortgage payments for a specific period, such as three, six months, or a year if you are experiencing a short-term financial hardship. You can also agree on a repayment plan where you pay all the skipped amounts in a lump sum.

Short sale

This involves selling your home for less than what you owe on your mortgage. It can help you avoid foreclosure and can be a good option if you owe more on your home than it is worth. Be sure to get your lender’s approval first, or better yet, in writing.

Contact a HUD-approved housing counselor.

A housing counselor can help you explore all the options available and help you find the best solution for your situation.

Conclusion

Here are options you might consider if facing foreclosure. Act quickly and communicate with your lender as soon as possible to explore your options and avoid foreclosure. You might also consider talking to a foreclosure attorney to learn about your state’s foreclosure laws and what to do in your situation.