There is more than likely a few things which have led to your being in the situation you are in now. You may have been through a bitter divorce, lost your job or experienced an illness. The bills are piling up and the increased price of utilities are staining your budget, perhaps you have an adjustable rate mortgage (ARM) which has skyrocketed; it is getting difficult to cope.
Unfortunately, while you’re worrying about stopping foreclosure of your home, you’re bombarded with letters, postcards, phone calls and strangers driving by and knocking on your door.
These foreclosure investors specialize in chasing homeowners just like you who are close to losing their homes. They’re interested in buying your home and profiting from it, because they believe you must sell the home.
Should you sell to an investor to avoid being foreclosed on? Maybe, but certainly not as your first option. And only after you exhausted other foreclosure prevention means such as rearranging your loan.
You Can Stop Foreclosure Through A Workout Of Your Loan
If you have missed a few payments, your credit score will drop dramatically; once this data is on your credit report, it will be difficult if not impossible to get a new loan to refinance your existing mortgage.
However, mortgage lenders would really rather not end up owning your home; this is why every mortgage lender has a loss mitigation department which tries to work with homeowners who are in default on their mortgages to bring them back onto a timely payment schedule. Unlike refinancing your mortgage with a new loan, this loss mitigation process does not require getting a credit approval, putting this alternative within reach for homeowners who are in default.
If You Do Work Out a Repayment Plan, Beware of the Challenges
One of the biggest problems with these loss mitigation departments is they don’t employ enough people to handle unusually high rates of foreclosure the country is experiencing right now. In fact, these plans are often difficult to arrange due to the heavy workload, which these employees are faced with. Since loss mitigation departments have so little time available to work with each file, they will tend to offer repayment plans which don’t give you enough time to catch up with your payments, and monthly payments which are larger than you can realistically afford.
With the difficult situation you are in, you may be tempted to take this repayment plan offered to stop foreclosure; however, this is generally just a short-term solution. Since the terms of the repayment plan are not a realistic fit for your budget, you will as likely or not be facing foreclosure again in a matter of months.
Stop Foreclosure By Hiring Foreclosure Workout Companies
One of the simplest, yet little known ways to get a lot better outcome through the Loss Mitigation process is to hire an experienced professional to do the work for you. These are companies that have experience of negotiating literally thousands of workout cases for owners in default. Some have established working relationships with the Loss Mitigation departments of many mortgage lenders nationwide.
These companies will look over your finances and help you come up with a repayment schedule, which is possible for you to meet; payments will be kept as low as possible to make it easier for you to make your payments. These companies have intimate knowledge of the programs offered by different lenders and can negotiate a better deal for you than you would be offered by the lender on your own. They may even be able to negotiate a lower interest rate on your mortgage, which will lower your payments.
Given your financial difficulties, you may think that hiring a professional service like this will be beyond your means. Thankfully, this is not the case. Most of these companies charge a flat fee, usually equivalent to a monthly mortgage payment. Since they can often negotiate a deferral on your next mortgage payment, their services often pay for themselves.
How to Cut Your Losses if Loss Mitigation is Not in Your Plans
If the lender mediation process won’t work for you, then you will need to sell your home to keep from having a foreclosure record on your credit report. If there is enough time before foreclosure, you best bet is to list your home with a realtor, this will let you get a better price for your home. If your foreclosure is imminent, however, you may have no alternative but to sell to an investor. These companies can buy your home quickly, just make sure that they have the means to close the deal quickly, before your home goes into foreclosure.
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