As of 2016, 4 percent of the total housing market in New Jersey is in foreclosure. Many homeowners are still carrying the burden of second mortgages and adjustable rate loans today. If you are facing foreclosure or are behind on your mortgage payments, there are things you can do right away that could help prevent the loss of your home.
First, immediately contact your lender's foreclosure department to inform them you are having a financial hardship. Next, consult with an attorney, tax advisor, and real estate broker to better understand the legal and financial aspects of your situation. Most importantly, don't be discouraged. There are several ways you can save your home and credit. Here are 6 ways to deal with foreclosure.
1. Short Sale. You can attempt sell your house for less than what you currently owe on your loan. Your home does not have to go into foreclosure, and you don't have to file bankruptcy. The lender saves money without having to file foreclosure proceedings, but does lose money by not getting the full price of the home during the sale. The buyer usually gets the house at a reduced price.
2. Partial Claim. If you qualify, your lender may be able to work with you to obtain an interest-free loan from the Housing and Urban Development (HUD) agency to bring your mortgage current. Visit the HUD website for more information on this option.
3. Special Forbearance. A lender can arrange a repayment plan based on your current financial situation or may provide a temporary reduction or suspension of your mortgage payments. You may qualify for this if you've recently experienced a reduction in income or an increase in living expenses.
4. Deed-in-lieu of foreclosure. You may be able to voluntarily "give" your home to your lender. This may help your chances of getting another mortgage loan in the future.
5. Mortgage Modification. You may be able to refinance the amount owed and extend the term of your mortgage loan for the missed payments. You may qualify if you've recovered from a financial hardship and your net income is less than it was before you defaulted on the loan.
6. Pre-Foreclosure Sale. You can sell your property and pay off your mortgage to avoid foreclosure and save your credit rating. This option works best If you know you can no longer afford to make the monthly payments but you haven't offically gone into foreclosure yet.
When facing foreclosure or any financial crisis the key is to contact your lender immediately to set up a payment plan or discuss other options. Ask the lender if the option chosen will be reported on your credit report, if so ask that the option not be reported. Just don't be in denial and wait for the worst to happen - tackle the issue right away. Above all, remember to consult with qualified professionals for real estate, tax, and legal advice before making a final decision on which option you choose.