If you are behind 3 or more months on your mortgage payments, you are probably feeling the weight of the world on your shoulders. Once your lender has filed a notice of default (NOD) the clock start ticking and many people become desperate to find a way out of the mess they have landed in. All hope is not lost; there may still be options for you to consider to stop foreclosure on your home.
One option is to find a buyer that is willing to assume your loan. Most mortgages now have a clause that the borrower has agreed to pay the loan off in full should they sell the property. This is called ‘due on sale’ and must be completed before the house is transferred to the buyer. However, with the real estate market as it is right now, your lender may be willing to modify your loan by eliminating that clause which will permit another buyer to assume your loan. That buyer will have to qualify for the loan, and the bank may want you to require a down payment from the buyer that will catch up your past due balance.
Another option is to find a buyer to take a lease with option to buy. This arrangement could benefit a potential buyer that doesn’t have enough money for a down payment for a standard mortgage, or perhaps they have some blemishes on their credit that is keeping them from getting approved for a loan. In this situation, you become the buyer’s landlord, still owning the property until the buyer has remedied the situation on their side and they can get approved for a loan. You should require a lump option payment upfront that will allow you to catch up your own back mortgage payments and then you should set the lease payments where they will cover your mortgage payment, property tax and insurance. You will however need to be prepared to cover the mortgage should the buyer fall short or face foreclosure yet again.
Yet another option is to sell your house fast for cash. There are many real estate investors looking for equitable properties. One of the bonuses of going with the sell my house fast option is that you are generally not required to make any improvements on the property and you don’t have to worry about the long delays that often accompany a short sale or Deed in Lieu situation. Although most cash home buyers make an offer below market value, there are still many who will make a fair offer that can help to pay off the balance on your mortgage, saving you from the credit crisis associated with foreclosure.
An option that many of us do our best to avoid but will stop the foreclosure process is bankruptcy. A foreclosure is seen as a collection effort and filing bankruptcy law prevents creditors and lenders from pursuing any further action against you. The drawback here is that once your bankruptcy petition goes to court and is approved, you will be assigned a bankruptcy trustee that is basically there to mediate between you and your creditor a repayment plan that you can afford. It probably won’t save your house, but it will buy you some time to consider other options.