When you can no longer pay your mortgage, the mortgage company has every right to sell off your home for the money that is due them. This process is called foreclosure and it starts with a notice of default being filed. Unfortunately, by the time it is gotten to this, you’re probably well behind in your payments and your only hope is to be able to somehow give them back their money in order to stop the foreclosure process and the resulting action on your credit report.
While the situation may seem bleak, there are a few things you can do. If you know you won’t be able to pay your mortgage at all then the only thing you can hope for is to get out of the foreclosure so that you leave the situation with your credit intact.
Of course, one way to do this to sell your home so that you can pay off the bank. This can be time sensitive because by the time your getting the foreclosure notices there’s not a lot of time to actually find a buyer and go through with the sale before the foreclosure auction happens on your home. Therefore, it’s imperative that you get a good mortgage broker and list the house at a price where it will sell quickly.
Another thing to consider is a short sale. While this does affect your credit, it’s not as severe as a foreclosure and may be a lot less stressful for you as well. In a short sale, basically, the lender is saying that they will accept less than the total amount due. If you are able, you can pay off the loan and move on to something else. However, not all banks will accept a short sale and it really depends on what is more financially appealing to them.
Another thing you could try is to get your lender to take back the deed. This is called Deed-in-Lieu of Foreclosure and basically you just sign away your rights to the home and the lender cancels out the mortgage and stops the foreclosure action. Unfortunately, this does affect your credit and probably looks just as bad as a foreclosure.
A foreclosure is not an easy thing to go through, but if you accept the fact that you can’t pay your mortgage at least there are a few things you can try to get out of it as gracefully as possible. The less damage it can do to your credit the easier it will be for you to move on and get another place to live.
