Your home is one of the most valuable assets that you will ever own. Avoiding foreclosure is a top priority for many homeowners, but can be difficult to do when you encounter difficulties with payment. To address this for homeowners in the Grand Rapids, Michigan area, we’ve compiled a list of the three top ways that you can successfully avoid foreclosure and navigate financial difficulties.
What is foreclosure?
Foreclosure is the term used to describe the process of a lender repossessing the home in the event that homeowners can’t complete their monthly payments. A foreclosure will not occur after one or two missed payments, it is a response to chronic missed payments — especially if no resolution plan or justification is communicated to the lender. Michigan is unique when it comes to foreclosures, as they are often resolved without going to court. If you’re facing difficulty making your payments, there are methods that you can use when avoiding foreclosure:
1. Submit a loan modification request from your lender
A loan modification request is a petition from the homeowner to the lender that asks for a change in terms of their loan and monthly payment amount. There are several pieces of documentation that you need to submit in order to begin this process, including:
- An application from the home retention department of your lending organization
- Income and expense documentation
- Pay stubs for the past 12 months
- Recent bank statements
- Anything else that your lender deems is necessary to consider the request
After you have the available information ready, you can then work with your lender to submit the request. There is no legal process for this, as this is handled at the organizational level.
2. Communicate any barriers to payment with your lender
While this is often overlooked, simply communicating with the lender to identify and explain any current barriers to payment can help them to inform you of appropriate next steps to manage your outstanding debt. Most commonly, payment disruptions come from:
- Chronic or acute bouts of illness
- Unemployment or a change in employment status
- New babies
- Deaths in the immediate family
- Increase in cost of other bills or expenses
If you’re struggling with the inability to pay for your home loan, and wish to avoid foreclosure, we encourage you to reach out to your lending institution and communicate the details of your current situation. After you do this and have it on record that you are actively seeking new ways to resolve the problem, you can continue to evaluate whatever available options you have toward debt resolution.
3. Apply to refinance your home
Refinancing your home allows the bank to pay off the remaining home loan’s balance with the amount from a new loan. This often results in homeowners getting a lower interest rate and overall lower payments, making this a strong choice to help homeowners avoid foreclosure. There is an application process that requires organizational approval, which may vary depending on the lender. Generally, to refinance your home, you need to have:
- Good or average credit
- Low debt to income ratio
- Down payment for a portion of your new loan amount
- Proof of homeownership
- Identifying information and documentation
Speaking to your lending institution about what would be needed in your specific case can help you to jumpstart your refinancing process, and get you back on track to financial stability. This option is especially helpful if your ability to pay has only been affected by recent events, and you have a significantly lower debt to income ratio and a high credit score.
Contact us today to avoid foreclosure
Avoiding foreclosure in Grand Rapids, Michigan requires the experience of a seasoned real estate solutions expert. At Lakeshore Home Buyer, we want to make your process is streamlined as possible. We help to empower homeowners to keep their homes in a way that makes financial sense for them. If you’re considering foreclosure, or need assistance maintaining the ownership of your home, contact us today at (616) 202-6498.