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Options when facing foreclosure

When people are having financial problems, they may see a possible foreclosure looming in the near future. But, oftentimes homeowners do not begin thinking about what other options may be available to them until it is too late. Recognizing that they are having a tough time financially and recognizing this fact early may allow homeowners to explore all available options before a foreclosure action commences.

For many people in this situation, the best move is often to try to refinance their mortgage. This has been a popular option for millions of Americans over the last few years as interest rates plummeted in the wake of the real estate bubble bursting. Refinancing a mortgage can often lead to a much lower monthly mortgage payment.

Next, when a homeowner begins to fall behind on payments, the best option may be to contact the lender directly to see if an agreement can be reached on a repayment plan for the missed payments. Some lenders may even agree to spread out the amount that is past due over multiple monthly payments, allowing the homeowner to catch up and avoid a foreclosure action.

One of the last options to consider, one that is perhaps the hardest to actually have take place, is getting the lender to agree to a deed in lieu of foreclosure transfer. In this option, ownership of the home in question is officially passed to the lender, and the borrower is released from the mortgage obligation. This option allows a homeowner to work with the lender to set up more flexibility on when the homeowner will vacate the property -- a luxury that is not usually part of a foreclosure.

By exploring all of the available options, a South Florida homeowner who is facing financial challenges may be able to prevent a foreclosure action.

Source: Fannie Mae, "Options to Stay in Your Home Overview," accessed on Aug. 22, 2014

Source: Fannie Mae, "Options to Stay in Your Home Overview," accessed on Aug. 22, 2014

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