If you find yourself in a bad financial situation, your top priority should be stopping foreclosure. Last year alone, one in every 4,339 homes in the US was foreclosed, an increase of 57% from 2021. When you truly think about that, that’s disturbingly high for only one year, and the problem isn’t getting better. So, how can I stop foreclosure and save my financial future? Well, whatever’s in your power.
Here’s what you need to know!
File For Bankruptcy
When you file for bankruptcy, something called an “automatic stay” immediately goes into effect. An automatic stay directly prohibits the bank from foreclosing on your home.
Now, the bank may file a motion for relief from this stay. This could potentially work, allowing the foreclosure to go through.
However, even if the bankruptcy court allows your bank to pursue the foreclosure, they will at least delay it by a month or two. This will give you time to explore alternative options.
Who Is Bankruptcy Best For?
Bankruptcy comes with some serious consequences to your credit … and by extension, to your financial future.
Filing for bankruptcy affects your score for seven to 10 years and its effects on your score will vary. However, when lenders, landlords, or even employers find bankruptcy on your credit report, it stands out.
Therefore, we would only recommend this option if you have nowhere else to go. If losing your home is the alternative, then bankruptcy is the obvious choice.
Contact an Attorney
To state the obvious, this option is right for anyone who can afford an attorney or find one who is willing to work pro bono when facing foreclosure. Of course, if you can’t afford to pay your bills, hiring an expensive attorney isn’t always feasible.
However, there are many attorneys out there willing to work for free or for discounted rates to help. You can check out some pro bono attorneys and contact them to find out if they can help. Of course, they tend to have busy lives, but it can’t hurt to try!
Moreover, an attorney will consult with you, ask questions about your case, and determine if they can help you. If they can, they may stop the foreclosure from occurring or work to negotiate an arrangement that works for both you and your lender. This is the best-case scenario for most people facing foreclosure.
Refinance Your Loan
If you want to stop your foreclosure from going through without destroying your financial future for the next decade, there are still options. The best option is to refinance your home, which can make managing payments far more comfortable.
While it won’t work for everybody’s situation, it will for most homeowners who have made mortgage payments for at least five to 10 years.
Essentially, refinancing works by taking out an entirely new loan for a fixed term. Now, the rules and payments are completely different, your current lender got their money back, and you’re no longer facing foreclosure.
Let’s say you spend $1,349 every month on your $200,000, 30-year mortgage. You’ve had the loan for 11 years, meaning you’ve already paid off around $67,000 and interest. In this case, you could refinance for a $133,000 new mortgage loan from another lender.
From there, your new payments become $884 if interest rates are the same, and you will pay it off over the next 30 years.
Who Is Refinancing Best For?
If your credit score is currently okay, and you’ve had the home for long enough, this is the way to go. You may even get a better interest rate, depending on when you got the original loan!
Moreover, you can get started applying for new mortgages right now if you think this is right for you. The only problem is with current interest rates, as this may affect your ability to get a loan. Fortunately, there are still other opportunities.
Of course, there’s also the lengthy loan to consider. Most people don’t want to carry their mortgage for another 30 years, especially if they’ve already been paying for so long. Again, if it’s your only option, go for it!
How Can I Stop Foreclosure Without Destroying My Credit?
If you want to take matters into your own hands and not wind up with nothing, selling your home is your best solution. You’ll need enough to pay the mortgage lender back, and hopefully, have some extra cash in your pocket to start new.
However, banks tend to move quickly upon foreclosures. You could be out of there much faster than a landlord could ever evict a tenant.
Consequently, a fast sale is essential to avoid foreclosure. You’ll need a fast cash offer and closing if the bank is already threatening foreclosure on your home. Get the offer you need today and avoid the worst-case scenario.
Remember, foreclosures are the ultimate hit to your credit. A single foreclosure can drop your credit score by over 100 points, and it can last on your report for up to 10 years. That difference can prevent you from finding housing, whether you plan to rent or buy.
Get the Help You Need Today
Now that we’ve answered the question “how can I stop foreclosure?”, find the path that’s right for you. None of them are ideal, but allowing the foreclosure to go through could have a serious impact on your financial future. It’s critical to do what you can to avoid this fate.
Keep reading our blog for our latest tips for homeowners, and find out more about your cash offer today!