Local NJ homeowners who are facing a financial challenge may find themselves in foreclosure.
Foreclosure is when the mortgage loan isn’t paid back and the lender on that mortgage starts the process to take back ownership of the property.
If you are entering the foreclosure process, you may ask themselves if there is anything you can do about it.
This blog post highlights foreclosure prevention measures in that you can take to save your equity or keep your home from foreclosure.
Foreclosure prevention measures in NJ
These foreclosure prevention measures are not one size fits all. Each financial situation presets unique challenges to all involved.
1. Pay off your mortgage / sell your property. 100% the quickest and easiest way to end the foreclosure process is to pay off your mortgage. This is all the banks wanted in the first place. By paying off your mortgage the lender no longer has a lien position on your home. Admittedly, this can be quite difficult, which is perhaps the reason that you’re in foreclosure in the first place.
2. Work out a deal with your bank. Sometimes you can work out a deal with your bank. Loan modifications have been apart of the process for many years. Sit down with a mortgage or foreclosure specialist and talk to them about changing the structure of your mortgage. As an example, Perhaps your payments get spread out so they are lower each month. Just make sure that the deal works for you so that you do end up in foreclosure again.
3. Do a short sale. A short sale is when you sell the property for less than is owed to the bank. The proceeds of the sale are used to pay down or pay off your outstanding amount with the bank. This keeps a foreclosure from impacting your credit score and it gets the bank off your back! It is possible for the lender to approve the sale to a third party buyer for less than is owed to the bank.
4. Give your deed in lieu. Another option would be a deed-in-lieu-of-foreclosure, which basically means that you will hand over the deed to your house to the bank and they agree not to put you through foreclosure. This will often only work if your house is worth approximately the amount owing on the mortgage. If not, the bank may pursue the difference.
5. File for bankruptcy. In some ways, a bankruptcy is far more dramatic than a foreclosure because it impacts your whole life. However, once you file for bankruptcy, the foreclosure process has to stop so it’s still a foreclosure prevention measure. Its always wise to consult an attorney before going this route.
If you’re not sure which one to do, consider this: If you can afford payments and you want to stay in the house then a foreclosure workout arrangement (#2) is probably your best option.
If you want to put everything behind you and move on with your life then consider selling your home and paying off your mortgage with that money.