3 Foreclosure Options
I wanted to explore three great foreclosure alternatives for homeowners in financial hardship.
Deed in lieu of Foreclosure
This is a foreclosure solution for homeowners that can not afford the home. This option simply involves handing over the deed to your home in place of the debt owed to your mortgage company.
What is the benefit to the Deed in lieu of foreclosure as opposed to just letting the home go to foreclosure?
Well the big benefit of a deed in lieu is that the debt is forgiven free and clear. This is different then if the property went to foreclosure because if at the foreclosure the property did not sell then the mortgage company would have to find a different avenue to sell the property. Many times the lender will end up selling the property for a loss which thew lender can then come after you for the difference.
That's right if you let your home go to foreclosure you can lose more then your home.
Deed in Lieu Fundamentals
Many times a Homeowner will be able to obtain a repayment plan from their lender as an alternative to foreclosure.
A repayment plan is perfect for any Homeowner who has faced a short term financial hardship and who has since recovered. As long as you can show your lender that you can now afford the monthly payments without any problem then they will generally give you another shot to make good on the mortgage.
Restructured Mortgage - Loan Modification
A loan modification also known as a mortgage modification is perhaps the most popular foreclosure solution out there for Homeowners. The reason for it's popularity with Homeowners is because a modified mortgage agreement which is a rewrite of the terms of the existing mortgage agreement based on the present financial situation of the homeowner, is usually given new terms that favor the Homeowner.
This means that if you were to obtain a mortgage modification you could potentially lower your principle on the mortgage as well as the monthly payment and interest rate.
Homeowners Can Stop Foreclosure