If you fear your mortgage lender is about to take your home back then you’ll want to act fast. Losing your home to foreclosure could you put in an even more difficult position than you are already in.
Filing for bankruptcy is an option that some people use to prevent foreclosure. While it might not prevent it forever, it puts an immediate halt to any foreclosure proceedings. It could allow you to reach a place where you can make your mortgage payments.
Bankruptcy has its pros and cons, so it is essential to understand what other options may exist. Here are a few alternative ways to prevent the bank from taking your home:
Talk with your lender
Lenders would generally prefer not to have to make foreclosures. Explaining your situation to them might mean you can reach a deal that buys you some extra time. They might agree to renegotiate your mortgage, perhaps extending it over more years. Or they might just allow you a short break in payments.
Take out another loan
You could approach a different lender for a personal loan, but be aware that they will carry out credit checks so may refuse you once they realize you are already struggling to pay your debts. Be careful, as some willing lenders impose exorbitant rates on those who will struggle to get a loan elsewhere. Alternatively, you might have a close friend or family member who can lend you enough to get your mortgage payments back on track.
Short selling your home
A short sale could free you from the debt burden, but it will leave you without a house. It involves selling the property for an amount under your outstanding mortgage, with the lender writing off the difference. You would need their permission first, naturally.
Each option has its merits and disadvantages. Learning more can help you decide whether to pursue bankruptcy or another option.