Have you missed payments on your mortgage? Have you received the dreaded foreclosure notice from your lender? If so, you are likely wondering what your options are to avoid foreclosure and stay in your home. This guide will walk you through how to avoid foreclosure in Massachusetts.
In Massachusetts, there are many ways to prevent foreclosure for homeowners. It is always best to act quickly to ensure the best possible outcome.
Foreclosure can mean much more than simply losing your home. Experiencing foreclosure can also damage your credit score and impact your taxes.
How Does Foreclosure Impact Your Credit Score?
According to research at FICO, foreclosure can lead to over a 100 point drop in your credit score. It can take up to 7 years to fully recover from a drop this significant. Damage to your credit score can impact large purchases in the future (including buying a new home), so it is important to know your options when faced with a foreclosure notice.
Want to avoid foreclosure in Massachusetts? Here are 4 options to consider:
Refinance Your Mortgage
Just because you received a foreclosure notice, it does not mean that you will have to forfeit your home. By refinancing your mortgage, you could take out a new mortgage on modified terms, still allowing you to pay off your current mortgage. Some homeowners even choose to refinance their mortgage in order to benefit from lower interest rates.
If you are having difficulty creating a strategy for paying your late mortgage payments, or if your mortgage is simply too overwhelming, you may be able to refinance the loan. Contact your lender to discuss your options for refinancing. Depending on your circumstances, you may be able to reduce your monthly payments or the overall interest rate of the mortgage.
Click here for more information about mortgage refinancing from the Federal Reserve Board.
Declare Bankruptcy to Postpone Losing Your Home
Certain types of bankruptcy can warrant an automatic stay to allow you to remain in your home longer. Declaring bankruptcy in Massachusetts has severe consequences and does not guarantee you will keep your house. The benefit of filing for bankruptcy is that it prevents all banks and lenders from collection activities immediately, and this remains until the settlement of the case. It will even prohibit a foreclosure sale while the bankruptcy is pending.
A bankruptcy case typically only lasts around 3 to 4 months, so it is not a long-term solution. If you wish to stay in your home, you will need to arrange your finances in order to adhere to a repayment plan, if one is created.
Arrange a Deed in Lieu
A deed in lieu of foreclosure is an agreement between the homeowner and the lender. The homeowner agrees to give the deed of the home back to the bank in exchange for being relieved of the mortgage debt. Both sides must enter this agreement voluntarily.
Often, lenders are reluctant to accept this deed in lieu of foreclosure for a variety of reasons. This agreement is often taken as a last resort solution to foreclosure. It has many of the same negative impacts on credit score as a foreclosure, but it allows the homeowner to avoid wasting time and money on a foreclosure proceeding. A benefit of the deed in lieu is the privacy of the process, preventing the embarrassment of facing a foreclosure. Frequently, a deed in lieu is pursued after a failed attempt at modifying the mortgage or selling the home.
Sell Your House to Avoid Foreclosure in Massachusetts
You may not want to lose your home, but sometimes it can be the best option to avoid the negative consequences of foreclosure. Selling your home prevents a drop in your credit score and can put you in a better financial position when relocating to your next residence.
Prior to selling your home, make sure to seek permission from your bank or mortgage company, or you could be faced with legal repercussions.
At Pavel Buys Houses, we know how difficult it can be to make decisions after receiving a foreclosure notice. We are dedicated to providing you with the best information so that you can make the right choice for your situation. We buy homes in Massachusetts in any condition, and our cash process makes the home selling process quick and easy. Call us at 781-309-7085 to discuss your options today.
If you have received a foreclosure notice, there are options. By choosing to sell your home in Massachusetts to us, you can quickly recover from this financial hardship and continue carrying on with life.