Financial Alternatives to Foreclosure: How to Keep Your Home
Foreclosure is a scary word. And unfortunately it’s also a scary reality for many aging homeowners. In fact, recent statistics highlighted by the AARP Foundation’s Housing Solutions Center, show that the housing crisis and prolonged economic recession has hit the 50+ segment of the population particularly hard:
• The foreclosure rate among homeowners 50 and over rose by 800 percent between 2007 and 2011.
• More than 1.5 million older Americans have lost their homes since 2007.
• More than half of 50+ borrowers in foreclosure were middle-incomers.
A foreclosure can happen to almost any homeowner, often for reasons out of their control. Many people lose their property, not because they knowingly take on more debt than they can handle, but because unforeseen circumstances such as divorce, medical bills, the death of a spouse, or the loss of a job can cause them to get behind on their payments.
What is important to know is that as much as you want to keep your house, most lenders want you to keep it too. And there are options to help borrowers through these difficult financial times. If you are unable to make your mortgage payment and are worried that you might fall behind, here is a brief overview of a few financial alternatives you may be eligible for:
You may be able to refinance your loan with new terms, a new interest rate and a new more affordable monthly payment. When you refinance there is no negative impact on your credit history. You may even be able to do it if your home has lost value and you owe more than your home is worth thanks to the federal government’s Home Affordable Refinance Program (HARP).
If you’ve already missed payments, you may be able to work with your lender to pay back the past due amount (along with your current payments) over a specified period of time.
If you have a temporary financial crisis that is complicating your ability to pay your loan, your mortgage company may be willing to suspend or reduce your monthly mortgage payment for a specified period of time.
Your lender may agree to change the original terms of your mortgage by lowering your payment amount, extending the length of your loan, or lowering your interest rate. You may also qualify for the federal government’s Home Affordable Modification Program (HAMP).
Deed for Lease
If you are not eligible to refinance or modify your mortgage, a deed for lease allows you to resolve your delinquency, avoid foreclosure and stay in your home. You transfer ownership of your home for a specific period of time to the mortgage lender in exchange for a release of your mortgage loan. You can then rent the property back from the lender at a more affordable monthly rate that allows you to stay in your home as a tenant.
Other options or state programs may be available. Not every homeowner is eligible for these alternatives, but it never hurts to ask. To learn more about the options available to you and help on how to keep your home, contact your lender or a HUD-certified counselor. Taking action today can help prevent you from foreclosure tomorrow!