5 Guaranteed Strategies to Protect Yourself from Foreclosure
If you’re concerned about going into foreclosure, you should take action to prevent it. Simply put, foreclosure is a legal process that kicks into play when a homeowner fails to make mortgage payments on their property.
If you get foreclosed on, your lender can take possession of your house. What’s more, you’ll end up with a terrible stain on your credit record. If that’s not enough, you’ll also be liable for a big tax bill the following year, because the IRS will consider your forgiven debt to be taxable income.
Considering all that, the best thing to do is avoid the foreclosure process. Here are 5 help tips to help you do just that.
Know your mortgage terms
It’s critically important to understand your mortgage agreement terms. This includes things such as the interest rate, payment schedule, and any penalties for missed or late payments. Knowing this information can help you budget and plan for mortgage payments, and avoid falling behind.
Create a budget
People rarely stop paying their mortgage for no reason. Usually, financial hardship is involved, for example unexpected unemployment. One way to help stay on track with your mortgage payments, and other bills and expenses, is to craft a budget. Make sure to prioritize mortgage payments and necessary spending over discretionary spending.
Talk to your lender
If you find yourself struggling to make mortgage payments, contact your lender immediately. In most cases lenders prefer to provide solutions—i.e., modify your loan, create a repayment plan, grant forbearance—instead of implementing the foreclosure process. Do not ignore the problem. It will only get worse and will not go away.
Sell your house for cash
If you’re unable to come to an agreement with your lender and there are no other options, it might be time to consider selling your home. It’s not an easy decision to make, but it keeps you in control by preventing foreclosure and all the problems that come with it.
You’ll probably need to sell your house fast. The best way to do that is to sell it for cash to a real estate investor. When you’re facing impending foreclosure, odds are you will not have the luxury of letting your house sit on the market for months on end.
Talk to professional
Consult with a professional who can help you avoid foreclosure. This could include an attorney, housing counselor, or a financial advisor. Don’t go it alone because the process can be complicated and there is no margin for error.
Foreclosure is no joke. It’s stressful and can have serious, long-lasting ramifications. However, the 5 tips outlined in the article should help you avoid the foreclosure pitfall.