Keeping on top of the family finances can be difficult at the best of times. However, when unexpected circumstances arise, such as the loss of a job or an illness that is inflating medical bills, debts can build up.
When you have children, it is often necessary to prioritize their needs over other bills, and it is not uncommon for families to start to struggle in paying mortgage repayments, sometimes getting to the point where they are facing the possibility of foreclosure.
However, when in such a situation, there are many options you may have beyond just going through the foreclosure process. This blog will look into some of the options that New York families can have.
It is usually preferable to try and avoid foreclosure, because it can damage your credit score both in the short and long term. Additionally, it can a very stressful process, that can affect every member of the family.
One way to try to avoid foreclosure is to try to work with your lender to attempt to reach some sort of arrangement, such as a modification, that will allow you to keep your home. Other foreclosure alternatives involve still relinquishing ownership of your home. We’ll now go over these.
You might have the option to partake in a short sale. This means that you agree with your mortgage lender that you will sell your home at its current market value, even though this will not cover the mortgage that you currently have. You and your lender could arrange that the remainder owed on the mortgage will be forgiven. So, a short sale could potentially have some significant overall benefits when it comes to a person’s debt situation. As a note, a short sale will generally only be an option for your family if you are not able to refinance the loan.
Deed-In-Lieu of foreclosure (DIL)
A DIL is the act of you as the mortgage borrower turning in your home voluntarily to your lender, upon some terms, usually resting on you being free from the mortgage obligations. This is usually a negotiation process where the lender and borrower work to come to some type of agreement.
If you are successful in securing a DIL, you may also be eligible to lease back the home from your lender. This means that you could rent your family home without the burden of a mortgage. It is not a straightforward process, however, it could be an attractive option for families wanting stability.
If you are struggling to keep up with mortgage repayments as a family, it is important that you consider all of your available options, and decide what would best meet your needs.