In the first half of 2023, United States foreclosure filings exceeded $185,000. For any type of property owner, foreclosures can be a terrible loss.
Before you hand your property over, you must exhaust all of your options. There are alternatives to foreclosure that can keep your property up and running until you get back on your feet.
Keep reading to learn how to save your property.
Property owners can prevent foreclosures with a loan modification. This is one of the most common alternatives to buy yourself more time before foreclosure is necessary.
If you cannot keep up with monthly payments, a loan modification will help you reduce your monthly payment while extending the loan terms to possibly reduce the interest rate.
Property owners have to fill out applications for loan modifications. The lender will decide if it's approved or not.
Most modifications are proprietary, but certain types of loans are eligible for specific modifications. For example, if you have a loan with Freddie Mac or Fannie Mae, you can benefit from the Flex Modification program.
If you think that your financial troubles will resolve soon, try to negotiate a forbearance agreement with your lender. You can use an ROI calculator to figure out if your finances will increase in the future.
This agreement means that the lender won't collect monthly payments during a certain period. They could also choose to collect reduced payments to help you out. These agreements typically last several months.
Eventually, you'll have to catch up with these nonpayments or reduced payments. This will help you save your property until your situation improves.
If you have already missed previous payments, you can work out a repayment plan with your lender. The lender will add a percentage of your overdue amounts to your monthly payments until your debt is paid off.
If you are in danger of losing your home, you can take out a reverse mortgage to pay off your initial mortgage.
This is a less common method because it is only available to individuals who are 62 years or older. If you meet this requirement, you will also need to have a substantial amount of equity in your home.
A reverse mortgage means receiving a line of credit, monthly payments, or a combination of the two. The loan is due when the owner moves out, sells the property, or dies.
It's important to know that reverse mortgages might be subject to foreclosure as well. If this happens, you'll lose a substantial amount of equity in your home.
Because there are significant downsides to reverse mortgages, most people choose to go with other alternatives.
Avoiding Foreclosures With the Help of Property Management
If you want to avoid foreclosures for your property, whether it is your home or a real estate investment, property management services can help.
When you choose an alternative way to bide yourself some time, property managers can come in and help you clean up the property. Properties in foreclosure often need maintenance and repairs.
At PMI Metroplex Properties, we can help owners in danger of foreclosure with our various services. Contact us today to learn more.