If you have difficulties making monthly payments on your mortgage, you may be dealing with a great deal of stress. You know that if you keep falling behind on your payments, you could end up losing your home, a thought scary enough to have you losing sleep. If this is your situation, you must talk to a Long Island foreclosure attorney about your options, particularly if there is anything you can do to avoid or stop foreclosure. Here are some ideas to avoid that dreadful conclusion.
Apply for a Loan Modification
If your lender agrees to change the terms of your loan to make it more affordable for you, you may be able to lower your interest rate, extend your loan term, or reduce your principal balance. However, it is likely that to qualify you will need to provide proof of hardship and income. A loan modification can stop foreclosure as long as it is in process.
File for Bankruptcy
Bankruptcy is a legal process that can help you eliminate or restructure your debts. Filing for bankruptcy can stop foreclosure immediately, but it may not be a permanent solution. You will need to consult with a bankruptcy attorney to determine if this is the right option for you and what type of bankruptcy you should file. Chapter 7 bankruptcy can discharge your debts, but you may lose your home in the process while Chapter 13 bankruptcy may allow you to keep your home and pay off your debts over time.
Short Sale Your Home
A short sale happens when the home is sold for less than what you owe on your mortgage, and your lender agrees to accept the proceeds and forgive the remaining debt. A short sale can help you avoid foreclosure and reduce the damage to your credit, but it may not be easy to find a buyer or get approval from your lender. You will also need to show proof of hardship and income, and you may have to pay taxes on the forgiven debt.
Ask for a Deed in Lieu of Foreclosure
A deed in lieu of foreclosure is when you voluntarily give up your home to your lender in exchange for being released from your mortgage obligation. This can help you avoid a public foreclosure sale and possibly get some relocation assistance from your lender, but it may not be an option if you have other liens on the property or if your lender does not agree to it. You will also have to pay taxes on the forgiven debt and face a negative impact on your credit.
These are some of the best ways to avoid foreclosure that are available, but they may not be suitable for you. Start by contacting your lender as soon as possible and trying to work out a solution that meets your needs. You may also want to seek professional advice from a HUD-approved housing counselor, a financial planner, or an attorney before making any decisions that will have an impact on your future.
