Going through foreclosure tends to be the final option when no other strategy to deal with an unpaid mortgage has worked. Many homeowners do everything that they can to avoid foreclosure because it means that they will lose their home and suffer damage to their credit score. If early and informed action is taken, it can be possible to successfully avoid foreclosure.
The best foreclosure prevention technique will likely depend on your individual circumstances and financial goals. The following are some common choices that can prevent the damages that foreclosure so often brings.
A deed in lieu of foreclosure
If a foreclosure is inevitable, by working with your bank, you may be able to avoid the official proceedings and simply agree to hand over your home to the bank. This is known as a deed in lieu of foreclosure. It has the advantage of being a more efficient process and helps you avoid significant damage to your credit score.
A short sale
Going through a short sale can be advantageous to both the lender and the debtor in comparison to a foreclosure. However, the bank will need to approve a short sale, and a price will need to be attained for the property that they agree on.
A bankruptcy filing
If you decide to file for bankruptcy, this will initiate an automatic stay. This means that your lender will not be able to take further action on a foreclosure for a certain amount of time.
If foreclosure is a possibility for you, it is important that you take action to prevent this as early as possible.