There are many foreclosure alternatives. If you cannot pay your mortgage, do not despair. Instead, be proactive, because the solutions are out there. This article will look at foreclosure alternatives.

The first of the foreclosure alternatives I’m going to suggest is to simply sell your home. If you are not “upside down” (meaning you owe more than your house is worth,) you can sell it and come out even or even take a little bit of money away from the deal.

Of course, this is a buyer’s market, and most people who are facing foreclosure don’t have that option.

In that case, your foreclosure alternative’s is to arrange a short sale. This is where an investor buys your home for less than you owe, but the bank agrees that they will take the investor’s offer as payment in full. Make sure that you get the bank’s agreement in writing so that they cannot go after you for a deficiency judgment later.

A similar solution occurs just between you and the bank with no investor. This is where you turn the house over to the bank and they wipe out the mortgage. The reason they are willing to do this is because many, many foreclosed homes are in terrible shape when the bank finally gets them. The appliances have all been removed. Even the copper piping has been taken and sold for scrap. In a Deed in Lieu of Foreclosure, you walk away and the bank gets a home in good condition.

Note that with either a Short Sale or a Deed in Lieu of Foreclosure, the homeowner will face a mark against their credit. Your credit score will go down with either of these options. However, you will see a recovery of your score within 2 years whereas a foreclosure itself is more serious and lasts for a longer time.

But, with the new help for homeowners coming out of Washington, there is hope for people to be able to stay in their homes. There are many new foreclosure alternatives. If you have a home whose mortgage is guaranteed by Freddie Mac or Fannie Mae, HUD requires that the banks work with you on the terms of your mortgage. Other recent initiatives have encouraged banks to work with homeowners even if they are not required to by a governmental agency.

Also, banks are increasingly coming to terms with the fact that foreclosing on all of these homes is not in their best interest. They now own hundreds of thousands of homes that they can neither sell or rent. Entire neighborhoods have become ghost towns which has further decreased the homes’ values.

So, work with your lender to either reduce the monthly payment by stretching the principal out over a longer period of time, tacking any deficiencies on to the end of the mortgage, or lowering your interest rate. These are the best foreclosure alternatives.

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