Real Estate

Stopping Foreclosure Fast

Story Published on July 30, 2008 ⋅  Email this Story ⋅  Print this Story ⋅ Post a comment ⋅

The quickest way to avoid foreclosure is to pay off the mortgage in fill. Of course, if this were possible you probably wouldn’t be reading this. If you are like most homeowners who are facing foreclosure, you are probably confused about your options. There are several ways that you can stop foreclosure on your home fast, but every option has its own pros and cons. Keep reading to discover the most common methods homeowners can stop foreclosure fast.

Refinancing Your Loan

This technique is most effective if you have ample time before the date of foreclosure. To be sure that this will work for you, you must discuss with your bank about a full payoff. Still, sometimes there is enough equity in a property for the homeowner to refinance the loan and pay off the original note in full, therefore preventing foreclosure. Bear in mind that because you represent a high risk to the new lender you may have more difficulty finding a refinance and if you do it will probably be at a much higher rate.

Bankruptcy Filing

Filing for bankruptcy to halt foreclosure quickly is a drastic measure and unless you have other reasons for the bankruptcy, it is not the ideal choice. Bankruptcy has many unfavorable consequences and can lead to even worse damage to your credit. It is true that bankruptcy will temporarily halt a foreclosure, but that only delays the foreclosure process until a judge allows it to go forward.

Short Sale

In a short sale, you reach an agreement with your lender for you to sell your house for less than what you owe. Of course, the bank isn’t fond of short sales because they lose money on the deal. It is still possible to have them approved by negotiating directly with your bank. A quick warning – short sales might have an impact on your taxes because the IRS thinks of short sales as income..

The Deed in Lieu of Foreclosure Option

If you have chosen that you won’t be trying to keep the home, you can stop the worst part of the foreclosure process by offering a “Deed in Lieu of Foreclosure”. This is when you actually hand over the bank the deed and in return they stop the foreclosure process. To find out if your bank would allow such an arrangement, you can negotiate it with their loss mitigation department.

While these methods can stop foreclosure, preventing it in the first place is the best choice. By acting quickly at the first signs of trouble, you can stop foreclosure. When you are facing foreclosure, the more time you have, the more choices are possible and the better the outcome.

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