If you receive a foreclosure notice by mail, it means the bank is serious about repossessing your home. As scary as it may be, this doesn't mean you're going to lose your home in the immediate future. The bank must take multiple steps to repossess your property, which provides you with the time necessary to stop the process.
The way you attempt to stop foreclosure is your decision, and here are some ideas to consider:
- Make back payments. The easiest way to stop foreclosure is to make back payments, thus giving the bank no reason to move forward with the process. This is easier said than done, but if you have the money it's the best step you can take.
- Foreclosure workout. Most lenders are more than willing to work with borrowers, as they aren't in the business of repossessing, managing and selling real estate. Don't hesitate to contact your lender to discuss every available foreclosure workout.
- Short sale. There are many pros and cons of a short sale, but the way it works is simple. The bank agrees for you to sell your home for less than what you owe. Once this happens, the property is no longer yours and there is no record of a foreclosure on your credit report.
- Deed in lieu of foreclosure. This is exactly what you think it is: you sign the deed of your home over to the bank and walk away. Lenders don't always like this option, but it's something to ask about nonetheless.
- Bankruptcy. Through a bankruptcy filing, you're able to stop the foreclosure process for the time being. Once you file the necessary paperwork, your mortgage lender is no longer permitted to take action. This gives you time to get things in order, but remember you only have so much time to figure out how to save your home.
No one wants to come face to face with the foreclosure process, but it's nice to know you have the power to stop it by taking the right steps.
There is no way of knowing which of these options will suit you best, so learn more about the finer details of each one. As you collect more knowledge and consider your legal rights as a homeowner, it will become clear as to which strategy makes the most sense.