Losing a home can be one of the most difficult events that a person or a family can go through.
A house doesn’t just represent the accumulated wealth that a person builds up over time, it endows the homeowner with a sense of pride and freedom. The good news is that losing a home isn’t always inevitable, even if you’re experiencing financial difficulty. What follows are a few alternatives to foreclosure that you should consider if the thought of losing your home is keeping you up at night.
1. Refinancing – Don’t wait until the last minute to take action to get your home mortgage under control. Refinancing with government programs like the Home Affordable Refinance Program (HARP) can help you lower your monthly payments and reduce the interest rate on your loan.
Refinancing is one of the first lines of defense in trying to prevent foreclosure. Even though HARP has changed over the years to allow more homeowners to refinance, it’s still important to try to remain current on your mortgage payments. It’s equally as important to try to maintain a good credit score before attempting to refinance. Both of these factors will weigh heavily on how much you’ll be able to save on your mortgage.
2. Unemployed Homeowners – All of us fall on hard times at some point in our lives. Losing a job can make it exceptionally difficult for some to pay their mortgages each month. But there is help for those that have lost their jobs and still need to make mortgage payments. The Home Affordable Unemployment Program (UP) is designed to help homeowners keep current on their mortgage for up to 12 months while they seek re-employment.
UP doesn’t actually give you money to pay your mortgage each month. Rather, it can help reduce or even suspend your mortgage payments while you find a new job. The Department of Housing and Urban Development requires the following conditions be met in order to qualify for UP:
- You are unemployed and eligible for unemployment benefits.
- You occupy the house as your primary residence.
- You have not previously received a HAMPSM modification.
- You obtained your mortgage on or before January 1, 2009.
- You owe up to $729,750 on your home.
3. Loan Modifications – Loan modifications can often be one of the second best options for homeowners looking to reduce their monthly payments if they are unable to refinance. Unlike many refinancing programs, it is not necessary to be current on your mortgage in order to qualify for a loan modification.
A loan modification alters the terms of the original home loan. This may include lowering the interest rate and/or monthly payments in order to make the loan more affordable. Provided that you can afford the modified payments, it is a smart way to help keep foreclosure at bay.
No matter where you’re at in your mortgage, it’s likely that there are better options still available to you than going through foreclosure. Even if you’re several months behind on your mortgage, foreclosure isn’t necessarily inevitable. The sooner you take action to get back on track with your mortgage, the easier it will be to avoid foreclosure.
