How Equity Can Help You Avoid Foreclosure

Here are all the different methods you can use to avoid foreclosure.

Today I want to talk about an important topic: How can you avoid foreclosure? 

Fortunately, there aren’t as many people worried about this right now as there could be. When the pandemic first hit, experts were worried that a huge wave of people would enter forbearance. This didn’t happen, and the percentage of mortgages in forbearance has been steadily decreasing since May. 

Despite declining numbers, there are still people behind on their mortgage payments. If you are one of these people, you could be at risk of foreclosure. This is when the bank tries to reclaim your loan and take ownership of your home. To avoid foreclosure, I have a few methods I want to go over. 

"My number one piece of advice is to talk to an expert."

The first thing you can do is try reinstatement, where you try to get up to date on your mortgage with a lump sum. The next method is to give the bank the deed to the house so that they don’t foreclose. Next, you can try and do a short sale, where you sell the property for less than the initial loan by negotiating with the bank. Finally, you can try loan modification, which is setting up a different payment plan with the lender. 

So those are your options, but they all come with some downside. For example, your credit will be severely affected. However, there may be another option, and that’s why I want to talk to you about the equity in your home. 

Equity is the difference between what you owe on your home and what it’s worth. Because homes have been appreciating rapidly over the last decade, most people have more equity in their homes than they think. Just over the last year, home values have increased by 25% in San Diego. You can leverage that equity to possibly avoid foreclosure. 

No matter which course you decide to take, my number one piece of advice is to talk to an expert. We can help you avoid foreclosure and protect your credit score, so please reach out to us via phone or email if you have any questions. We are always happy to help.

 

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