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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 11, 2020

10 Best Ways to Save Money Faster and Smarter

10 Best Ways to Save Money Faster and Smarter

People love to talk about budgeting, reducing spending. and investing. But unfortunately, talk is cheap, and poor money management is expensive. It’s easy to talk about the best way to save money, but putting it into practice is a different thing.

What people need to talk about is the practical and efficient ways you can quickly save money to accomplish your goals. After all, they don’t teach this stuff in school.

Here are the 10 best ways to save money faster and smarter.

1. Cancel All Your Subscriptions

Yes, all of them.

Okay, you can keep your wifi and trash. But other than that, cancel all your monthly subscriptions for one month. You will survive, I promise. Better yet, you will realize you won’t miss all of them.

Now that you have had 30 days to examine what you really missed and what you never thought twice about, you can add some of them back in. The others? you never have to think about them again.

This is something you can and should do with every part of your life. If it’s clutter, cancel it. Being able to step back and see what is cluttering your life and what is excelling your forward helps improve your quality of life and financial standing.

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2. Automate Savings From Your Paycheck

Many of us are so excited about getting a new job that we rush through the paperwork during the hiring process. Good news for you, I have had lots of jobs so I have seen it a million times.

There is an option for a portion of your paycheck to go directly into a secondary savings account. This is by far the most effective way to save money every month. We tend to spend most of what we have. So, if we take it off the top first, then it’s less likely to be spent. Just head over to HR and ask. It will only take two minutes.

3. Cancel the Happy Hours for the Rest of the Pandemic

We are in the middle of a global pandemic, which means that there is no better time to buy some drinks from the local store and stop shelling out $5 a drink at the local cocktail bar. When we look back at our bank statements, we are always shocked that fast food and alcohol can add up so quickly. You can easily save a couple of hundred dollars just by taking this step.

A great exercise is to print out your last bank statement and highlight all the areas of alcohol and fast food. The amount may surprise you and make you think twice about that old fashion.

4. Online Grocery Shopping

Some people think online shopping increases the amount they spend. For the most part, I would agree—except for this category.

Online grocery shopping is now a no-brainer, though. Whenever you walk through a grocery store, two things always happen: you always grab impulse items, and you never know the total of your cart until you checkout. This means that we always spend more than we originally planned.

With online shopping, you can see your total as you add items to your cart. You are way less inclined to make those impulse purchases and because of that, I would venture to say that you could even pay to have them delivered to your door and still save money each month by choosing online grocery shopping.

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5. Get a Famzoo Debit Card

This is something my wife and I swear by, and it’s great for the entire family! Famzoo strictly exists to help families and kids budget their money better. Each month, my wife and I have an allotted amount loaded onto our pre-paid Famzoo debit card. This amount has changed every year depending on promotions, kids, stage of life, etc.

The important part is that when you give yourself the freedom to spend a certain amount, you are more likely to only spend the allotted amount. Think of it as a diet. If you are counting calories, you are more likely to stick close to the amount you set. You can also look for some tips online to better stick to your family budget.

6. Purge

This is actually my favorite to do, and it is actually one of the best ways to save money. Raise your hand if you have ever moved. Okay, so everyone.

When we move, we are always amazed at how much junk we have acquired. I have found that about every 6 months, I can find a couple of boxes to sell online of things that we never use. This not only gives you so extra quick cash, but it also keeps your house more tidy and organized.

Now, go clean out that garage!

7. Amazon Subscribe and Save

32! That is how many items I have setup on amazon subscribe and save. Let me explain.

This sounds expensive, I know. But it actually saves us hundreds of dollars per year! We all need toothpaste, shampoo, razors, laundry detergent, toilet paper right? This feature is truly a triple threat. When you have more than 5 items on subscribe and save, you automatically unlock the max savings for every product on your list. This can be up to 20% per item!

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Now, even better is that it ships straight to your door on the exact day you want the item, maybe monthly or maybe you only need it every 4 months. This way, you never have too much or never run out. Either way, it’s totally customizable.

Lastly, there is no contract for any items, which means you can switch brands or items at any given time at no cost. My advice: every single staple item should be on your subscribe and save.

8. Rewards

This may ruffle some feathers, but if you are using your debit card for purchases, you are missing out on free money! We have this notion that credit cards are evil but in reality, they are the same piece of plastic as your debit card.

How you use it can be bad, don’t get me wrong. But if you want my opinion though, ditch the debit card and get a rewards credit card. Use it just like you would your debit card and make sure to pay it off as soon as the statement comes in!

Just to give you an idea of how powerful this can be in terms of money, here are some things that our miles have paid for:

  • 4 nights in Vail with Flight
  • Rental car in Vail (convertible might I add)
  • Flight to Ireland
  • Flight to Hawaii
  • Multiple staycations at very nice Hotels

That’s roughly about 7 thousand dollars in travel expenses so far! Remember that the credit card is just a tool and can be one that benefits you if you use it wisely. Ironically, this can be an effective way to save money.

Pro tip: If you don’t trust yourself carrying around a credit card, then set up all your monthly bills with your credit and leave it in a drawer at home. This way, you rack up miles but don’t get tempted to overspend.

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9. Vacation With Friends

Now, I know travel is hard right now but what a perfect time to go grab an Airbnb in the woods with a couple of friends and detox from the world right now!

Vacationing alone can be pricey and get rather boring quickly, but if you split lodging and set out for a road trip, it can become affordable quickly! For a couple of hundred bucks apiece, you can have one of the most relaxing vacations ever. Don’t forget to pick up your food at the local grocery store to avoid eating out every meal!

10. Make a Budget

When is the last time you updated your budget or made one for that matter? Making a budget is like writing down your goals. If you don’t make a budget, then you will struggle to save.

How can you know if you are spending wisely if you are not tracking everything?

Our advice would be to get a finance app like Mint, Every dollar, or personal capital. All these apps are free and do a tremendous job of tracking spending and budgeting. I still am old-school and have an excel spreadsheet which I do highly recommend.

Work Smarter, Not Harder

The entire goal is to boost your bank account while reducing the effort required. Efficiency is the name of the game, and automation is the key player. Luckily, we live in a world that has more perks than we can ever take advantage of. But if I were to choose a few, it would be the ones above.

Taking on all 10 of these steps may seem a little daunting. You can first try to pick three of your favorite and start there. Saving money doesn’t have to be a chore as long. As we use the tools correctly, it can be quite effortless. And now, you have a great blueprint to get started!

More Tips on Saving Money

Featured photo credit: Sharon McCutcheon via unsplash.com

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