With the troubles the national economy has seen in recent years, there are homeowners who are scrambling for options in order to remain in their homes. The payments could be out of reach due to a job loss, a pay cut or a rising interest rate that wasn’t planned for. There are a few options that a homeowner can investigate in order to remain in their home so they do not have to move or look for somewhere else to live. Some of the options include filing for bankruptcy, refinancing, investigating government bailout programs and then lastly, foreclosure.
Bankruptcy
There are two types of bankruptcy that an individual can file, Chapter 7 and Chapter 13. Both can allow the family to remain in the home if the mortgage is reaffirmed and the new payment process works for them. Bankruptcy doesn’t always mean one has to lose their possessions, if they are up to date on the payments. For instance, a person can be behind with medical or credit card bills, but the mortgage is current. In this case, the person remains in the home and the other debts are discharged. Another bankruptcy option is to restructure the payments so that any back amount is repaid with the monthly amount of the loan over a period of two or three years. When this option is elected, the bank has to accept the new payment plan because you are making an effort to repay the loan, you just couldn’t meet their lump sum requirements.
Check Mortgage Rates
Another great option to lower the monthly payment so it is affordable again is to lower the interest rate. To refinance a mortgage rate, call your own bank and explain your hardship and see what options they have with getting a new, lower rate on the mortgage. Lowering the rate might extend out the length of the loan, but if it makes it more affordable so foreclosure is avoided, it can be a great choice. Depending on the program you qualify for or if it is a true refinance, there may be a fee involved to process the paperwork. This fee can also be rolled in to the paperwork if it is too high for you to pay upfront and remain making the monthly payments. .
Foreclosure
As a last resort, a person might have to resort to a foreclosure. This means that the person cannot make the monthly payments in full, has gotten behind in the payments and can’t come up with a lump sum or has already moved out of the house and has stopped payments on the process. The person or family has to relinquish all rights to the home and any money that was invested in to it up to that point, including a deposit at the time of purchase. Foreclosure is not a desirable option, as it affects a person’s credit for a long time to come, but sometimes it is unavoidable due to economic hardships from a job loss or uncontrollable situations.