A homeowner’s biggest fear is foreclosure, resulting from unforeseen circumstances like losing a job or a significant medical expenditure. However, how long you have until a foreclosure sale occurs is governed by state law and might vary what you can do if you end up in this predicament.

How To Avoid Foreclosure?

A slight delay in making a mortgage payment will not put your home at risk of being foreclosed. Remember to inform your lender or servicer that you have paid late if you make a payment shortly after the due date.

However, if you still haven’t paid after the grace period (typically 10 to 15 days), your mortgage lender has sent past-due warnings, or your numerous mortgage payments are behind, you need to move swiftly to get your mortgage back in good standing and avoid foreclosure proceedings.

Here are some possible alternatives to foreclosure your lender may provide. Before doing any of the following steps, you should probably consult a lawyer:

Mortgage Repayment

A lender may grant some financial relief by allowing you to pay back a missed payment in two payments over the next two months if you have a temporary financial setback (such as costly auto repairs or a medical emergency).

Modification of Loan

Mortgage servicers can permanently change your loan’s conditions to help you get current on your payments. These changes typically involve extending the loan’s amortization period, reducing your interest rate, or adding the past-due amount to the loan and re-amortizing the combined balance. In any case, this may have little effect on the overall debt.

Deed-in-lieu of Foreclosure

When you voluntarily transfer ownership of your property to your lender, this is called a deed-in-lieu of foreclosure and will stop the foreclosure process from happening. Depending on the laws in your state and your lender’s policies, this may allow you to postpone paying off your mortgage in full. Inquire about a deficiency waiver from your lender before agreeing to a deed-in-lieu of foreclosure. It is the gap between the current value of your house and the amount still owed on your mortgage. (If there is a shortfall, the lender may pursue legal action to try to recoup losses after you have moved out.)

Short Sale

In a short sale, the lender agrees to accept less than the total amount owed on the mortgage in exchange for receiving the selling profits and forgiving any residual balance. You can save part of your equity if your lender agrees to a short sale. Finding a buyer and navigating the lengthy process of gaining the required permissions can be easy with the assistance of a real estate professional experienced in short sales.

Short Refinance

The lender’s concession reduces your existing debt, and the remainder is rolled into a new loan. Some homeowners may be unable to refinance their mortgages like they did when the housing market collapsed.

Hard Money Loan Refinance

A hard money loan, which comes from a private lender, usually an individual, will have exorbitant interest rates and fees. Still, it might give you some time to sell your property and avoid foreclosure. Still, if you have a choice, you should look elsewhere before settling on this.