Note: We receive a commission for purchases made through the links on this site. Our sponsors, however, do not influence our editorial content in any way.
While the foreclosure rate in the United States is at an all-time low since the Great Recession, foreclosures are still happening across the nation. In fact, about one-third of all local and state housing markets saw foreclosure filings increase in 2018. The bad news is lenders can start the foreclosure process to repossess your home if you miss enough payments. That’s why if foreclosure is “knocking at your door,” it’s important to have a plan. The good news is that you can take action to handle foreclosure like the pros. Here’s what you can do:
If you’re facing foreclosure, one of the best steps you can take is to communicate with your lender. This method applies to any struggles with debt. Your lender may help you by offering the option for a forbearance repayment plan, loan modification or refinancing. By opening up a line of communication, your lenders will know that you are willing to work with them in some manner to try and prevent foreclosure. Foreclosure is a costly process for lenders, too. They would rather try to work out your issues without involving lawyers and court fees, so communication is important.
A short sale may be an ideal option to come out of foreclosure the best way you can. When you opt for a short sale, you offer your property for sale for less than what you may owe on your home. It may be beneficial to go for a short sale to avoid damaging your credit and going through a lengthy foreclosure process. If all parties agree to the terms, then you could avoid foreclosure and the bank will be able to hand over the home to someone else.
If you can communicate with your lender and avoid foreclosure or even bankruptcy, it’s better for your credit score. Foreclosure can drop your credit score by 85-160 points. Bankruptcy can drop it by as much as 240.
One of the best ways for handling a foreclosure is speaking with a counselor approved by HUD. A HUD-approved housing counselor has experience and training to guide you through the foreclosure process and help you find the best option for keeping your home. You can find HUD-approved housing counselors through the Making Home Affordable (MHA) program to give you free advice.
When you’re facing foreclosure, it’s important to take the necessary steps to keep your home and avoid the process. Luckily, there are several options for achieving this feat. Just follow these tips to handle the foreclosure process the best way you can, so you can find financial peace and keep your home. Once the process is over. take special care to nurture your credit score, pay your bills on time and repair your credit. This is not a life sentence! With time and dedication, you’ll be back to where you want to be.