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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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Published on November 20, 2018

The Best Ways to Save Money Even Impulsive Spenders Can Get Behind

The Best Ways to Save Money Even Impulsive Spenders Can Get Behind

The truth is, there are many “money saving guides” online, but most don’t cover the root issue for not saving.

Once I’d discovered a few key factors that allowed me to save 10k in one year, I realized why most articles couldn’t help me. The problem is that even with the right strategies you can still fail to save money. You need to have the right systems in place and the right mindset.

In this guide, I’ll cover the best ways to save money — practical yet powerful steps you can take to start saving more. It won’t be easy but with hard work, I’m confident you’ll be able to save more money–even if you’re an impulsive spender.

Why Your Past Prevents You from Saving Money

Are you constantly thinking about your financial mistakes?

If so, these thoughts are holding you back from saving.

I get it, you wish you could go back in time to avoid your financial downfalls. But dwelling over your past will only rob you from your future. Instead, reflect on your mistakes and ask yourself what lessons you can learn from them.

It wasn’t easy for me to accept that I had accumulated thousands of dollars in credit card debt. Once I did, I started heading in the right direction. Embrace your past failures and use them as an opportunity to set new financial goals.

For example, after accepting that you’re thousands of dollars in debt create a plan to be debt free in a year or two. This way when you’ll be at peace even when you get negative thoughts about your finances. Now you can focus more time on saving and less on your past financial mistakes.

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How to Effortlessly Track Your Spending

Stop manually tracking your spending.

Leverage powerful analytic tools such as Personal Capital and these money management apps to do the work for you. This tool has worked for me and has kept me motivated to why I’m saving in the first place. Once you login to your Personal Capital dashboard, you’re able to view your net worth.

When I’d first signed up with Personal Capital, I had a negative net worth, but this motivated me to save more. With this tool, you can also view your spending patterns, expenses, and how much money you’re saving.

Use your net worth as your north star to saving more. Whenever you experience financial setbacks, view how far you’ve come along. Saving money is only half the battle, being consistent is the other half.

The Truth on Why You Keep Failing

Saving money isn’t sexy. If it was, wouldn’t everyone be doing it?

Some people are natural savers, but most are impulsive spenders. Instead of denying that you’re an impulsive spender, embrace it.

Don’t try to save 60 to 70% of your income if this means you’ll live a miserable life. Saving money isn’t a race but a marathon. You’re saving for retirement and for large purchases.

If you’re currently having a hard time saving, start spending more money on nice things. This may sound counterintuitive but hear me out. Wouldn’t it be better to save $200 each month for 12 months instead of $500 for 3 months?

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Most people run into trouble because they create budgets that set them up for failure. This system won’t work for those who are frugal, but chances are they don’t need help saving. This system is for those who can’t save money and need to be rewarded for their hard work.

Only because you’re buying nice things doesn’t mean that you’ll save less. Here are some rules you should have in place:

  1. Save more than 50% of your available money (after expenses)
  2. Only buy nice things after saving
  3. Automate your savings with automatic bank transfers

These are the same rules that helped me save thousands each year while buying the latest iPhone. Focus only on items that are important to you. Remember, you can afford anything but not everything.

How to Foolproof Yourself out of Debt

Personal finance is a game. On one end, you’re earning money; and on the to other, you’re saving. But what ends up counting in the end isn’t how much you earn but how much you save. Research shows that about 60% of Americans spend more than they save.[1]

So how can you separate yourself from the 60%?

By not accumulating more debt. This way you’ll have more money to save and avoid having more financial obligations. A great way to stop accumulating debt is using cash to pay for all your transactions.

This will be challenging, depending on how reliant you are with your credit card, but it’s worth the effort. Not only will you stop accruing debt, but you’ll also be more conscious with what you buy.

For example, you’ll think twice about purchasing a new $200 headphone despite having the cash to buy them. According to a poll conducted by The CreditCards.com, 5 out of 6 Americans are impulsive spenders.[2]

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Telling yourself that you’ll have the discipline to not buy things won’t cut it. This is equal to having junk food in your fridge while trying to eat healthy–it’s only a matter of time before you slip. By using cash to make your purchases, you’ll spend less and save more.

A Proven Formula to Skyrocket Your Savings

Having proven systems in place to help you save more is important, but they’re not the best way to save money.

You can search for dozens of ways to save money, but there’ll always be a limit. Instead of spending the majority of your effort saving, look for ways to increase your income. The truth is that once you have the right systems in place, saving is easy.

What’s challenging is earning more money. There are many routes you can take to achieve this. For example, you can work long and hard at your current job to earn a raise. But there’s one problem–you’re depending on someone else to give you a raise.

Your company will have to have the budget, and you’ll have to know how to toot your own horn to get this raise. This isn’t to say that earning a raise is impossible, but things are better when you’re in control right? That’s why building a side-hustle is the best way to increase your income.

Think of your side-hustle as a part-time job doing something you enjoy. You can sell items on eBay for a profit, or design websites for small businesses. Building a side-hustle will be on the hardest things you’ll do, be too stubborn to quit.

During the early stages, you won’t be making money and that’s okay. Since you already have a source of income, you won’t be dependent on your side-hustle to pay for your expenses. Depending on how much time you invest in your side-hustle, it can one day replace your current income.

Whatever route you take, focus more on earning and save as much as possible. You have more control than you give yourself credit for.

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Transform Yourself into a Saving Money Machine

Saving money isn’t complicated but it’s one of the hardest things you’ll do.

By learning from your mistakes and rewarding yourself after saving you’ll save more. What would you do with an extra $200 or $500 each month? To some, this is life-changing money that can improve the quality of their lives.

The truth is saving money is an art. Save too much and you’ll quit, but save too little and you’ll pay for the consequences in the future. Saving money takes effort and having the right systems in place.

Imagine if you’d started saving an extra $100 this next month? Or, saved $20K in one year? Although it’s hard to imagine, this can be your reality if you follow the principles covered in this guide.

Take a moment to brainstorm which goals you’d be able to reach if you had extra money each month. Use these goals as motivation to help you stay on track on your journey to saving more. If I was able to save thousands of dollars with little guidance, imagine what you’ll be able to do.

What are you waiting for? Go and start saving money, the sky is your limit.

Featured photo credit: rawpixel via unsplash.com

Reference

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