What is Foreclosure?
When you purchased your home, chances are you took out a home loan and your lender took a security interest in the property. In the event that you cannot make your mortgage payments, this security interest gives your lender the right to foreclose--auction off your house and keep the proceeds in order to recover its investment. And, if your property cannot be sold for what is owed, a deficiency judgment could be pursued against you. Both a foreclosure and a deficiency judgment could seriously affect your ability to qualify for credit in the future.
If you are facing the possibility of foreclosure, you know how frightening this situation can be. But now is not the time to panic. Now is the time to explore your options. But before we do that, take a moment to answer these questions.
- Are you unable to make your house payments because of a temporary financial setback?
or
- Are your mortgage payments too much for you to handle, even in good times?
If your situation is temporary, there are things you can do to ward off foreclosure and get back on your feet. On the other hand, if you're in over your head you need to acknowledge that fact and realize that giving up the house may be the best thing for you. That does not mean you should just sit back and let the foreclosure happen. But you should not try to hold on to it.
Only you know the answers to these important questions. Keep them in mind as your read through the following foreclosure options.
