Posted: 1 Jul '20

Can You Prevent Home Foreclosure with a Mortgage Loan?

Can You Prevent Home Foreclosure with a Mortgage Loan?

If you get more than three months behind on your mortgage, often the bank will begin the foreclosure process, where they take possession of your home and sell it. Contact us to learn more.

There are many reasons that you might get behind on your mortgage, and if you do, it is important to stay in close communication with them. If you keep them in the loop, they may be able to make a payment plan with you so that they don’t have to start foreclosure.

Sometimes, however, they will put the file with their legal department and start the foreclosure process. If you are in this situation, but have enough equity in your home, there is often a way out with a mortgage loan for foreclosure.

The risk of foreclosure is scary and can also be paralyzing to some extent. However, by working with an experienced broker to get a private mortgage, you can preserve your homeowner status and make a plan to get back on your feet.

Common Reasons for Foreclosure

Other than the very rare individuals who willfully opt not to honour their obligations, foreclosure often comes after an event that significantly affects a family's finances, such as:

  • Loss of job
  • Death of one of the family income earners
  • Family problems such as divorce
  • Over accumulation of debts
  • Illness or injury
  • Unexpected major home expenses such as a basement flood

What Impact Does Foreclosure Have?

Despite the overwhelming feelings that come with the risk of foreclosure, it is vital to act fast and assess options such as taking a mortgage loan for foreclosure. Inaction or any delays increase the chances of losing your home and making your investment and sacrifices worthless. The more time that goes by, the more interest and legal fees that will accumulate so being proactive is very important. Foreclosure is also damaging to your credit score and can limit your access to credit in the future. If a private mortgage stops the process and either gets you back on your feet or allows you to sell the home yourself, then you can avoid having the foreclosure show up on your credit report.

How to Deal with Foreclosure

         1. Communicate with Your Lender

When foreclosure is looming, it's always best to take a proactive approach. First things first, you have to know that foreclosure is also not in your lender's best interest, nor is it a cause of action they want to pursue. The process is long, and attorney fees make it expensive. Lenders are more open to missing a couple of payments or adjusting loan terms than proceed with foreclosure.

Therefore, the first step in slowing down or completely avoiding foreclosure is communicating with your lender. By law, lenders are allowed to begin the process of foreclosure once you have missed one payment. Reach out to them once you realize you will be unable to make a payment.

If you foresee an inability to make mortgage payments for an extended period, let your mortgage lender know immediately. Ask for extra time to make the payments or a readjustment of the loan terms.

         2. Take a Mortgage Loan for Foreclosure

If you are already in arrears, your mortgage lender may not be too keen to adjust terms for you and may proceed with foreclosure. However, this does not mean your house is gone. Though banks do not generally give loans to bail people out, there are institutions like private lenders where you can access a mortgage loan for foreclosure. By taking such a loan, you’ll be able to get back on track with your mortgage payments and retain ownership of your home. The value of an experienced mortgage broker is paramount.

Is a Mortgage Loan for Foreclosure Worth It?

Beyond being an investment, your home holds a lot of sentimental value as it’s where the best of family memories are made. Are you facing foreclosure? Contact us about a mortgage loan for foreclosure to protect your family from the trauma of eviction. 

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