Are you behind on your mortgage payments?  Do you feel like the world is crashing down on you?  If you feel like foreclosure is inevitable, the truth is that you have options.  If you’re faced with this situation, these alternatives to foreclosure could get you out of a tight spot.

Option #1: Do Absolutely Nothing

If you choose to let the foreclosure proceed, you’ll ultimately be kicked out of your house.  This might seem counterintuitive to getting yourself out of a sticky situation, but it will buy you some time.  New Jersey requires that you have 30 days to file an answer to foreclosure.  If you choose not to answer, the foreclosure process moves ahead.  You’ll have roughly 9 months to 1 year until you’re evicted.

The positive?  You’ll have 9-12 months free of mortgage payments and additional expenses, saving you a large sum of money while still allowing you to have a place to live.  The negatives are obvious: you’ll have a foreclosure on your credit report, which has long-range effects.  Your lender could also file a deficiency judgment, which means you could be obligated to pay the difference between the total mortgage debt and foreclosure sale price.

Option #2: Reinstate Your Loan

Reinstating your loan will bring you out of foreclosure, and it is possible.  Even if you’re behind on mortgage payments now, you still have the option to catch up.  This option will usually require a large sum of money in order to pay the lender back what you owe.  You also may need to pay additional late fees, which could stack up depending on how long you’ve been delinquent.

Option #3: Pay Off Your Loan

Your home may have enough equity that you can actually sell your property to pay off the loan.  This option is an easy way to move on with your life and avoid the damaging effects of a foreclosure on your credit history.  Even while you’re in foreclosure, the bank cannot take away your rights to sell your property.

Option #4: Apply For A Loan Modification

A loan modification is an agreement between you and your lender, changing the terms of your loan so you can keep making payments.  These changes can be temporary or permanent and can include adjustments to your interest rate, terms, and principal.

Option #5: Deed In Lieu Of Foreclosure

This is, in essence, a voluntary foreclosure.  You’ll sign the deed to your house over to your lender, thereby avoiding the long process and stress of letting the foreclosure pursue.  The caveat with this option is that you’ll still have a foreclosure on your credit report.

Option #6: Short Sale

A short sale is when your lender accepts less than what is owed on the property.  Most lenders prefer this option out of all the others, simply because it saves them money.

If you want to learn more about the short sale process, check out the next video in my series for more direction on how to avoid foreclosure.  Feel free to reach out to me directly with details about your specific situation, and I’d be happy to help!