The Top 5 Alternatives to Foreclosure: Which One is Best for You?

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Throughout the country, families and individuals are finding it increasingly difficult to keep up with mortgage payments and other monthly bills. As a result, they are being served notices of foreclosure and being threatened with losing their homes. What they may not realize is that there are ways to challenge foreclosure and find another option. Even if it means selling their home, it may still be a better alternative that the having your home foreclosed on.

Option to Foreclosure #1: Home Loan Modification

A mortgage is a legally binding contract between the borrower and the lender. The lender is under no obligation to let the borrower out of this contract nor are they required to change any of the terms. However, it often turns out to be in the best interests of both parties to agree to a loan modification.

Through negotiation and changing the terms of the agreement, the overall principal could be reduced, the monthly repayments lowered, and the interest rates changed.

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Option to Foreclosure #2: A Short Sale

A short sale is essentially what it sounds like, selling a home short of what it is worth. When more is owed on a property than its current market value, the debt cannot be paid even if the borrower sells the home and gives all of the proceeds to the bank or lender. However, through negotiation, the lender may agree to a short sale.

Although this may not appear to be in their best interests, lenders will often agree to this because it ensures that they will receive the majority of their money back rather than nothing at all. It also negates the necessity of the complicated and lengthy process of foreclosure.

Option to Foreclosure #3: Deed in Lieu of Foreclosure

A deed in lieu of foreclosure is similar to a short sale in that the borrower does give up their home, but this is voluntary and in their control. Foreclosure can be an emotionally-traumatizing time, especially if there are children involved. A deed in lieu allows the family to remain in control of their lives and act in their own timing. Even so, this usually occurs when other options have failed and the borrower has defaulted on their loan.

By signing over the deed of their home to the bank or other lender, the remainder of their debt is forgiven. Again, may lenders will agree to this as foreclosure creates hassle for everyone as the property could get caught up in legal red tape.

Option to Foreclosure #4: Mediation

Mediation can prove to be extremely beneficial in these tricky situations. In some states, like Florida, mediation is actually required under law once foreclosure papers have been signed. The government realizes that once a home is foreclosed on, it could sit empty for months, if not years. The value of the property can greatly depreciate due to neglect and disrepair, especially due to the staggering amount of homes that are now under complete ownership of the bank. With a strong legal advocate on your side during a meeting with your lender, you could find a better option for everyone involved.

Option to Foreclosure #5: Debt Settlement

Lastly, debt settlement is not only a viable option for those who are facing foreclosure, but for those who have found themselves trapped by any type of debt. It involves negotiating with your lender and agreeing to a lump sum in payment for your loans. Even though this sum is less than is actually owed on the property, some lenders will agree to it so they can get their money quickly and easily.

If you want to learn if you could avail from one of these foreclosure alternatives, you should speak with a legal representative. They could examine you specific situation and seek to ascertain which path is best for you and your family.

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About the Author: Written by Deborah A Carman. If you have questions about foreclosure, you should consider contacting the Carman Law Firm, P.A. With years of experience in this area of law, they understand how difficult these situations can be and so are dedicated to providing their clients with the strong legal representation.

Each Florida foreclosure lawyer from their team has experience in fighting foreclosure, mediation, avoiding scams, loan modifications, short sales, strategic default, and more. Their main priority is to help their clients find the best option for them and you can be completely confident that they have what it takes to help you get your life back on track. Contact a Florida foreclosure attorney from the team today for a free consultation.

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