Buying a home is one of the biggest investments most people in Florida will ever make. Unlike other investments though, your home is emotionally significant to you. This can make dealing with complicated matters, such as foreclosure, even more challenging.
Deciding to fight foreclosure should always be based on your financial reality. However, it is understandable that you might struggle to let go of a home in which you have created so many good memories. If you are not sure whether trying to hang on to your house is a good idea, it might be helpful to consider some of the following options.
Mortgage modifications and repayment plans
If financial problems are making it difficult to keep up with your current mortgage payment, you could ask your lender for a modification. The goal is to create new terms that make your monthly payments more manageable or reasonable. Some common changes that are made in a loan modification include:
- Lowering the interest rate
- Lengthening the payment schedule
- Rolling delinquent payments into a new balance with a new payment schedule
Some financial setbacks are temporary. Maybe you received an unexpected medical bill, or perhaps your car broke down. Since these types of financial complications are often short lived, you could ask your lender for a mortgage repayment plan. For example, the lender might agree to let you miss a couple of payments that you would then make up in installments.
Short sales and refinances
A short sale is a good option if you are not set on keeping your home. In this process, you sell your house for less than what you owe on the condition that the lender agrees to forgive your remaining debt. If you want to proceed with a short sale, it is essential that you obtain lender approval first, or you could still end up owing the remaining balance.
A short refinance might be a better option if you want to stay in your home. With a short refinance, a lender forgives a portion of your past due debt. The remaining debt then gets refinanced into a new loan, preferably with terms favorable enough for you to maintain regular payments.
What about bankruptcy?
Most people do not experience financial problems in a vacuum. If you are having trouble keeping up with your mortgage, you might also be struggling to pay your other debts. If this is the case, bankruptcy could help you avoid foreclosure and address your debts all at once.
While foreclosure might feel like a personal failing, the reality is that life is complicated. Financial issues can affect anyone at any point in time, and you are certainly not alone in your struggles. You would be well advised to consider the path that other Florida homeowners have taken to avoid foreclosure, including mortgage modifications, short sales and refinancing.