e swiftest way to avoid foreclosure is to pay off the entire debt. Of course, if this were possible you probably wouldn’t be reading this. If you are like most homeowners who are going in to foreclosure, you are probably confused about your choices. There are several methods you can use to stop foreclosure on your home fast, but each remedy has its own benefits and drawbacks. Keep reading to discover several typical ways homeowners can stop foreclosure fast.
Refinancing Your Loan
This method only works if you have sufficient time before the date of foreclosure sale. To be sure that this will work for you, you should ask the bank about a full payoff. Still, it is sometimes the case that there is enough equity in a home for the homeowner to refinance the loan and pay off the original note in full, thus preventing foreclosure. Bear in mind that because you are a risk to the new lender you may have more difficulty finding a refinance and if you do it will probably be at a higher interest rate.
Bankruptcy Filing
Both a Chapter 7 and a Chapter 13 bankruptcy will delay a foreclosure while the parties wait on the bankruptcy court to give permission for them to proceed. Bankruptcy of course is a last choice that comes with it’s own set of pitfalls, including credit damage. It’s not a good idea to declare bankruptcy on account of the foreclosure alone.
Using Short Sales
In a short sale, you reach an agreement with your lender for you to sell the home for less than what you owe. Naturally, the bank doesn’t like short sales because they lose money on the deal. It is still possible to have them approved by negotiating directly with your bank. A word of caution - short sales might have an effect on your taxes because the IRS thinks of short sales as income..
Offering a Deed in Lieu of Foreclosure
If you are facing the possibility of losing the home, it might be wiser to avoid the very end of the foreclosure process by offering a “Deed in Lieu of Foreclosure”. This is also good if you owe more than the home is worth and your bank will accept it. A Deed in Lieu of Foreclosure is turning the home back over to the bank to stop foreclosure fast. It can be a good solution if you are not planning to keep the home.
All of these are common ways that homeowners use to stop a foreclosure quickly. In a perfect situation, you would have more time to decide what to do. When it comes to foreclosure, the more time you have the more options you have as well.