In times of financial hardship, it is not uncommon for a person to fall behind on their mortgage payments. When this happens, the home could go into foreclosure. This means that the lender or bank has the right to take possession of the house. If your bank or lender has threatened to take possession of your home, it is important to know how to stop foreclosure before it is too late.
Explain the Situation to your Lender
If you have missed a mortgage payment, or may not be able to make your payments, it is a good idea to reach out to the lender. What many people do not know is that it is not in the lender’s best interest to foreclose on your home. It can cost up to $30,000 for the lender to foreclose. Giving you a chance to solve your financial difficulties is the best option for the lender and can stop foreclosure.
Modify the Terms of your Loan
During times of financial hardship, your lender may be willing to modify the terms of your loan. There are a few options that you have when modifying your loan terms.
• Extend the life of the loan: If your lender agrees to extend the life of your loan, your monthly payments will go down. Often times, monthly payments will go down enough for you to be able to afford the payments.
• Lower your interest rate: When you first applied for your loan, your interest rate was determined by your credit score at the time. If your credit score has improved since you first applied for the loan, you may qualify for a lower interest rate. The lower rate can lower your monthly payments.
• Switch from an adjustable rate to a fixed rate: Adjustable rate loans start with a low interest rate; however, that rate goes up over time. This can make your monthly payments go up. With a fixed rate loan, the interest is the same for each monthly payment. If your lender is willing to allow you to switch from an adjustable rate to a fixed rate, you may be able to afford your monthly payments.
If you are having financial problems and are unable to make your mortgage payments, it is important to know what to do to stop foreclosure.