Your mortgage is most likely your biggest source of debt. While this is common for most families, mortgage debt and default is becoming all too common in this tough economy. For most people, the threat of losing their home to foreclosure is rapidly approaching and leaving many people feeling overwhelmed. Luckily, homeowners in nearly all situations have options for avoiding foreclosure.
With more talk of refinancing options, many homeowners find enticing offers from lenders to be quite attractive. Although refinancing your mortgage may help lower your monthly mortgage payment, it is proactive solution. In other words, refinancing is not a viable option for anyone who is already having financial problems or missed a mortgage payment. Refinancing takes good credit and payment history, something that is tarnished once a payment has been missed.
As one of the most notable foreclosure alternatives, loan modifications are not highly advertised by lenders. In fact, most homeowners have to explicitly request one in order to even be considered. While this option may be able to lower monthly payments and help a homeowner get caught up on missed payments, not everyone will qualify. Modifications also carry high credit requirements and may be denied if you have already missed a payment. Requesting a modification before default is generally the best strategy.
Short Sales And Deed In Lieu
While a short sale and deed in lieu can prevent a foreclosure, you will be required to forfeit the home. In general, a short sale can help you absolve your mortgage debt liability while minimizing credit damage and future lending problems. However, the process can be long and tedious. A deed in lieu is typically not recommended until all other mortgage debt solutions have been attempted as they provide foreclosure relief but at a greater credit expense than other options.