How to Prevent Foreclosure: 7 Ways to Stop a Foreclosure

If you need to know how to prevent foreclosure on your home, you might already be in a tough situation. Even the idea of foreclosure is scary. However, it’s not always an inevitable end. 

When you fear foreclosure on your home, you have options and resources. Below, we look at 7 ways to stop a foreclosure. Some help you stay in your home while others help to mitigate your losses. 

Need a quick solution? At Third Coast, we buy houses to help homeowners out of tough situations. Get in touch to learn more!

What Is Foreclosure?

Foreclosure is a legal process used by banks and mortgage lenders to regain losses. Typically, this occurs when a borrower stops making payments toward their mortgage loan. Let’s take a step back, though. 

When you take out a mortgage to buy a house, you agree to make monthly payments to your lender. This lasts until your debt + interest are clear. If someone loses their ability to repay the loan, the lender can take ownership of the home and sell it. 

This helps them recoup their losses either partially or fully. Still, this isn’t the automatic conclusion if you miss a few mortgage payments. However, it’s important to understand the ultimate consequences. 

• Eviction from your home
• A major impact on your credit score

Now that you understand the situation, let’s take a look at how to prevent foreclosure.

7 Ways to Prevent Foreclosure

Whether you missed a payment or foresee financial hardship, there’s no need to panic. You just need to know how to prevent foreclosure. Luckily, you have a few options to try. 

#1 Contact Your Bank or Lender

As soon as you learn that you are going to miss a mortgage payment, it’s a good idea to contact your bank or lender. Explain the situation to them and give them the details of your situation. Look at your income, expenses, changes to both, and your savings. 

Generally, mortgage companies don’t want to deal with the foreclosure process either, so it’s a good idea to work with your lender to find an alternative solution. 

#2 Loan Modification

Loan modification means that your lender adjusts the loan details to make your monthly payment less of a burden. However, it’s important to understand that this sort of deal has the potential to extend the length of your loan. For instance, lower payments mean a longer term and more interest. 

Before you agree to anything, be sure that you can afford the changed monthly payment. You don’t want to fall into delinquency twice, after all. 

#3 Forbearance

Generally speaking, lenders reserve this option for situations of severe hardship. Here are a few examples: 

• A natural disaster, such as a hurricane 
• Loss of employment
• Extended illness

With forbearance, you have the option to skip a few payments or make reduced payments for a certain period of time. 

#4 Deed-in-Lieu of Foreclosure

Under this option, you sign your house over to your bank or mortgage company and simply part ways. When it comes to how to prevent foreclosure, this is not always ideal, but it helps to prevent a negative impact on your credit. 

If you decide to go this route, ensure that your lender agrees to terms in writing. This way, you can ensure you have no obligation to pay anything after you leave. Additionally, it’s a good idea to ask about a “cash for keys” program to help cover relocation costs. 

#5 Repayment Plans

In some cases, your lender restructures your loan and works with you to develop a payment plan. For a set period of time, this helps you get back on track. However, this often requires an increase in your monthly payments. 

Additionally, it’s important to note that this doesn’t reduce the total amount you owe. 

#6 Short Sale

In terms of how to prevent foreclosure, this is similar to a deed-in-lieu of foreclosure. Under these terms, you agree to sell your home for less than the amount owed on the mortgage. However, depending on the local laws and terms of your agreement,  you might have to pay the difference. 

If you decide to go this route, request that your lender waive the difference so that you don’t have to worry about it once you part ways. 

#7 Sell Your House to a Cash Home Buyer

As you look at how to prevent foreclosure, consider reaching out to a home buyer. When you find a professional home buyer, like Third Coast, it allows you to sell your home quickly. In some cases, it also allows you to net enough money to cover your debt and have funds to start your next steps. 

As cash home buyers, we offer an easy way to sell your home without the worry of deals falling through. Moreover, we offer quotes with no hidden fees and no obligations. With a quick way to close, we simply offer a straightforward solution. 

Want to Know How to Prevent Foreclosure? Call Our Team for a Cash Offer!

If you need to know how to prevent foreclosure in the Greater Houston Area, give the team at Third Coast Home Buyers a call. We partner with people in “sell my house fast” situations to help them find solutions. 

Call our team today or submit a form to set up an appointment with our Houston home buyers.