Foreclosure: Know Your Options

Mortgage default can happen to homeowners of all ages, in all neighborhoods, and in any point in time of the economic cycle. If you are currently facing default, it is helpful and important to know your options. The sooner you take action, the better the result will be in your favor.

Option 1: Contact your lender and request a loan modification

The lender will evaluate a minimum of two aspects: your credit score and how long the default has occurred. If your credit score is too low and if you delay taking action, they will deny your modification request.

Option 2: Pay off the debt

The longer you wait to pay off the debt, interest, penalties, and attorney fees accumulate. You always have the option to pay the debt in full to satisfy the loan. If you are unable to pay the entire loan amount off and can only contribute a portion of it, you need to contact your lender to verify IF paying a small portion can stop the foreclosure process. Often times it will not be enough to stop the process.

Option 3: Sell your home

If you are unable to modify your loan, or if you desire selling, then selling is the best option for you. Selling your home benefits your credit score by eliminating the debt tied to your home purchase. When you sell your mortgaged home, the debt is paid in full by the buyer’s purchase. Selling the home when facing foreclosure is often easier for the seller because it eliminates your debt, boosts your credit score, gives you a profit (money in your pocket), and provides you a fresh start. Your quality of life will improve from no longer dealing with the stress and worry of financial burden.

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