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8 Ways to Stop a Foreclosure Process

8 Ways to Stop a Foreclosure Process

The default in a mortgage payment can sometimes be unavoidable due to various circumstances. The homeowner might have lost their job or they might have spent their allotted mortgage payment on other pressing expenses. If the homeowner has missed several payments without contacting their lending company, they might have to face foreclosure.

However, there are several ways to avoid going through the foreclosure process. Even if the homeowner cannot actually pay the debt, they can still find ways to prevent the foreclosure of their home, since this would heavily impact their credit rating, and it prevents them from buying another property for the next 5 to 7 years. The debtor can also appeal for an extension of their payment schedule until they get back on their feet.

Read on to learn more about how you can stop foreclosure proceedings from pushing through if it happens to you.

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1. Negotiate with Lender

Before any of the drastic foreclosure process begins, the homeowner’s first option is to talk to their lender. They can agree on the possibility of restructuring their debt. The homeowner can explain their circumstances and the reason why they defaulted on their payment, and the lender might provide the homeowner with certain allowances that would make the terms of the mortgage payment easier and more attainable.

2. File for Bankruptcy

If the homeowner[1] does not have the means to pay for their mortgage and other debts, they can file for bankruptcy, so that the government can prevent their creditors from coming after them. Technically, the debt of the homeowner still exists, but it gives them the time to get back on their feet and find ways to pay their debt again. Moreover, the homeowner and the creditors should devise a reasonable plan that is beneficial to all the parties regarding the repayment of the existing debts.

3. Foreclosure Relief Programs

There are programs implemented by the government that help homeowners prevent the foreclosure of their homes, like the Making Home Affordable Program.[2] This benefit is afforded to chosen homeowners who have defaulted on the payment of their mortgages, so that they can avoid foreclosure of their property. If the homeowner is unemployed, they can apply for the Home Affordable Unemployment Program or the FHA Special Forbearance, which provide assistance to the homeowner for up to twelve months.

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4. Loan Refinancing

If it is possible, the debtor can look at taking out a second loan to finance the first loan they have missed. Since the remaining mortgage length is shorter and the unpaid balance is smaller, the monthly payment on the second loan could possibly be lower. The homeowner can look around for the best possible loan option, or they can ask their original lender if they can refinance the loan. It is vital to take care of all the paperwork before the actual foreclosure process begins to prevent the foreclosure sale from pushing through.

5. Lease Assumption

Another option that the homeowner can look at if they want to stop the foreclosure process is to have someone assume the lease. Tara-Nicholle Nelson describes the lease-assumption scenario in this manner: “In a lease-option scenario, the buyer becomes your tenant, and you continue owning the property until the buyer has saved enough down payment money, improved their credit sufficiently or sold their other home.”

She also provides tips on how to effectively use the lease-option to halt the foreclosure process: “To successfully use a lease-option to stop the foreclosure process, you must negotiate lease payments that cover most or all of your mortgage payment, property tax, and insurance obligations — enough that you can make up any difference and still pay to live somewhere else.”[3]

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6. Deed in Lieu

The credit rating of the homeowner will be affected if the foreclosure processes pushes through. However, they have another course of action in the form of a deed in lieu. This would not damage their credit score as badly as the actual foreclosure proceeding, since the homeowner would be transferring the ownership of the property to the lender. The lender and the homeowner would sign an agreement that relieves the debtor of his entire obligation to the creditor.

7. Deed for Lease

Once the deed in lieu has been signed, the buyer has the option to rent back their home, which is called the deed for lease. This means that the lender has consented to allowing the homeowner to stay in the property as a renter for a specified period of time. The deed in lieu has already prevented the foreclosure from transpiring and the deed for leases just gives the lender the right to become the sole administrator of the debtor’s new lease.

8. Short Sale

If the homeowner receives an offer on the home while they are in the middle of the foreclosure process, the lender is bound to consider it. The homeowner can sell the property at a price that is higher than their debt so that they can clear themselves from the contractual obligations. Moreover, short sales would not affect the debtor’s credit score if the lender does not report the sale in a soft market to credit monitoring agencies. This can also allow the debtor to purchase another home in two years.

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If the homeowner is looking to sell their house quickly, there are several online sites, like needtosellmyhousefast.com,[4] that can cater to the debtor’s immediate need. One of my friends was struggling with paying the mortgage on his house, and he decided to sell his house, so he tried posting on this site and he got an instant offer on his property. Moreover, he got a fairly reasonable price for that deal.

In conclusion, there are ways to avoid going through the foreclosure process. The reasons for non-payment can be fortuitous and unavoidable, but the homeowner should make it a point to reach out to their lender before it is too late. You might be able to negotiate the terms of your loan with the lender, and you can save yourself the trouble of having to find another home.

Reference

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Abhay Jeet Mishra

Writer at Lifehack & Enterested.com

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Last Updated on June 26, 2020

25 Easy Tips on How to Save Money Fast

25 Easy Tips on How to Save Money Fast

“How to save money fast?” This is the question asked by all of us not in the top 1% of rich people.

If you are looking for ways to drastically reduce your expenses immediately, first look at what you need to spend money on every week. And I mean really need.

You don’t really need to order in food. You don’t really need to buy expensive perfume.

Building from that, you can work out how your regular expenses can be reduced.

As for irregular expenses, they can also be deceptively costly in the long run. Once-off buys can also be tackled with some prudent planning and a little extra research.

And remember: a budgeted lifestyle does not mean a bad or boring one!

But first, understand what budget you can cut down on daily:

  • Regular expenses for the average adult (can be trimmed but not eliminated):
    • food
    • rent/mortgage
    • cell phone
    • insurance
    • socializing/entertainment
    • transportation
    • hygiene products
    • household bills
  • Irregular expenses for the average adult (can be eliminated or cut down a lot):
    • travel
    • clothing
    • medication (*depends)
    • grooming (hair, nails etc.)
    • gifts

Now, let’s dive right into the 25 ways to save money fast:

Save Money on Food

1. Bring a stock of food to the office/work

Instead of popping out for an overpriced salad and a smoothie, leave a set of basic utensils at the office as well as a stock of non-perishable goods such as tinned fruit, tuna, rice crackers and so on (try to avoid the junk food and this can turn into a pretty great diet!).

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Stocking up means you won’t forget or say “I didn’t have the time” when you rushed out to work in the morning.

2. Buy the store-brand version

Many basic foods, such as bread and milk, will taste exactly the same as their branded alternatives. Go for stuff with minimal additives and preservatives. Meat in a tube is probably insanely unhealthy!

3. Eat cheaper cuts of meat

Learn how to tenderize and flavour cheaper meat and fish, and save on the (typically) most expensive item on your grocery bill.

4. Have group dinners

If 10 friends put $5 each in the kitty, it’s pretty easy to make a giant lasagne and get refreshments, as well as hang out with your favourite people.

Save Money in Transport

5. Get a bicycle

Save on gas money and bus/metro fares with this underrated mode of transport.

6. Use public transport and/or don’t get taxis

Some places can only be reached by car. But as a good practise, check your public transport website and see if any routes pass nearby where you need to get to. Walk as much as you can.

7. Find the cheapest gas

Regularly check out where the cheapest gas can be bought.

Save Money in General Shopping

8. Shop online

Not only will you save on the gas or transport fares from going to the shopping mall but you will also find better deals

9. Sell your old stuff

Get your unwanted belongings up on eBay ASAP and earn a few dollars.

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Here’re more ideas for you: 25 Things to Sell to Make a Lot of Money

10. Bulk buying stores

For regular non-perishable/slow perishable purchases such as toilet paper, cat food, pasta, washing powder and so on, do an epic stocking-up trip to a co-op or equivalent (my mum used to go to a place that restaurants buy from).

Be wary of supermarket “deals”, as some have been found to be fraudulent after working out a simple calculation.

11. Become a flea market/car boot sale/street market guru

You can find original gifts and develop good negotiation skills at these places.

12. Generic brand medication

More often than not, the generic version of paracetamol and other basics work the same as the branded version.

13. Choose deodorant, not perfume

It blows my mind when someone drops $70 on a bottle of spray. Stick with a nice deodorant, and not only will you smell just fine but you’ll be sweat-free as well!

Cut Down on Household Expenses

14. Printing

Ink is one of the most expensive substances in the office and coloured ink is doubly so. B

e more efficient and choose black and white, and if your printer doesn’t have a print-both-sides options, just print odd pages first, re-insert the paper and print even pages.

Expand the margins of what you are printing as often as you can to save on paper.

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15. Minimize SMS and phone calls

A combination of a free chat service such as WhatsApp and a free call service such as Skype can reduce your bill to nothing (so long as you have a decent Wifi connection).

16. Shop around for insurance

Most people don’t spend enough time searching for the best insurance deal.

Keep a watchful eye out for deals and new competitors in the market.

17. Try re-negotiating your rent/mortgage

If you have built up a good credit history or a good rapport with your landlord, then chances are a frank chat about needing to tighten your spending could result in lowering your payments. You’ve nothing to lose from trying.

18. Don’t get a TV

Invest in a computer/laptop and an internet-only package. You can watch more (and often better) entertainment on the web, and skip the advertisements as well.

19. Pool your internet bill with a neighbour

My apartment building is basically a big old house split into three apartments. There are five of us in total. We pool the internet bill, making it crazy cheap.

Save Money in Socializing, Entertainment And Travel

20. Have house parties

Instead of paying for overpriced drinks, set up a series of in-house get-togethers with your friends. Everyone takes a turn, so it’s not always your house that needs cleaning.

For sound insulation, hang heavy drapes on the walls and windows. For music, invest in a good second-hand set of speakers which you can connect to your computer. Let Spotify or Grooveshark playlists do the rest.

21. Open festivals, meetups and events

It never fails to surprise me how much underground stuff goes on around me for free or for very cheap. Find out who runs the blogs and websites that list all the less well-known cultural activities.

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22. Volunteer

If you can’t pay for a ticket, volunteer and get to be there anyway.

23. Housesit

There are multiple housesitting websites offering you the possibility to avoid paying hotels and skip the discomfort of crummy hostels.

Save Money on Hygiene and Beauty

24. DIY beauty

French manicures, pedicures, waxing, eyebrows… pretty much all of these can be achieved at home (and done well) with some practise. There are plenty excellent blogs and YouTube tutorials to help.

25. Fewer haircuts/volunteer at a trainee hairdresser

If you can’t bear the risk of a trainee touching your locks, learn more ways to manipulate your hair as it grows and get haircuts sparingly. Women’s haircuts are outrageously priced in many cities.

Bonus: Effective Money-Saving Tips for Everything

Here’s a summary of what you can generally do to save more money:

  • Share/pool resources. Organize a neighbourhood sharing scheme, common resources for your apartment block or with your friends. Not everybody needs an individual lawnmower.
  • Buy energy-saving everything. The easiest way to lower your bills – replace those lightbulbs!
  • Buy in bulk. Be sensible about it (i.e. make sure you have space!), and drastically reduce weekly expenditure.
  • DIY. Skill up using YouTube tutorials on plumbing and many other essential services so you never have to pay for simple problems again.
  • Research a lot before making a decision. Most money-wasting is the result of poor preparation and planning. Don’t shirk this part just because you don’t like it!
  • Use your network. Your network is full of resources that can ease the pain of budgeting. Ask for help.
  • Stop and think. Do I really need it?

Unfortunately, there are some things that require plain ol’ giving up for the time being. This can include high-cost sports such as skiing, the latest versions of some technologies, the finest brands of food/drinks, premier seats at the opera and most other indulgences.

What is important to remember during lean times is that when you look back on your life, it will be the experiences that stand out, not the extra comforts.

Living on a budget can teach you a lot about how much you can really get out of your paycheck. We only live one life, so make the most of every penny you earn!

More Tips for Personal Finance Management

Featured photo credit: Unsplash via unsplash.com

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