Knowing that you have a pending foreclosure on your home can be extremely stressful and demoralizing. Almost no one buys a home with thought of foreclosure as a remote possibility, but it does happen every day. Perhaps you lost your job due to unforeseen circumstances, or your investments didn’t turn out as expected. Whatever the reason you find yourself facing a notice of default, you still have options that can help reduce the impact on your credit and help you move forward.
One of the most important things that people facing foreclosures should do is work closely with their mortgage company. Your mortgage company doesn’t want to foreclose any more than you do. It costs them money, too, and also ties up their assets. Here are some of the options you can consider if you are not able to reinstate your loan after a notice of default:
- Sign a deed in lieu of foreclosure: This legal transaction allows you to sign the home over to the mortgage lender without completing the foreclosure. While it will still affect your credit, it can simplify and speed up the process, allowing you to move forward.
- Ask about a short sale: Short sales affect your credit, but not as much as a foreclosure would. This is a good option if you are underwater on your mortgage and your home is now worth less than you owe on your mortgage.
- Explore the option of bankruptcy: This is not an option to be taken lightly, but you can discuss it as an option with a bankruptcy specialist.
- Sell your home for cash: If the market value of your home is worth more than your mortgage, simply selling the home may allow you to pay off your mortgage and avoid foreclosure. If you don’t have the time to complete a traditional sale, a sale to a cash buyer (like us at Widespread Properties) may be a great option. It could even leave you with cash in your pocket after your mortgage is paid off.