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Posted by: Maricopa Lawyers on Sep 9, 2015

When you bought your home, you never intended to miss any mortgage payments. Unfortunately, life circumstances can cause unpleasant changes in your ability to pay and you could face foreclosure when you do. In times like these, it’s important to respond properly if there’s any hope of saving your Arizona property.

One of the worst things you can do that’s fairly common is nothing at all. Many people are so paralyzed by the fear of losing their homes that they don’t communicate with their lenders. If you’re behind on mortgage payments, talk to your lender. Let them know your situation and ask them what suggestions they have. Lenders deal with defaulted customers every day, and most lenders don’t want to immediately foreclose a home, because of the costly and time-consuming legal process of doing so. When you do, here are some typical alternatives that they’ll offer:

Forbearance

This is when your lender reinstates the loan through a payment of a lump sum or payment schedule. Forbearance is an agreement between the lender and the borrower that reinstates the delinquent loan through the payment of a lump sum or a schedule of payments over a period of time. For example, if you’re $2,000 behind, that can be broken up into a monthly payment and added to your existing monthly payment.

Loan Modification

A loan modification is any change in the terms of the loan, including a decreased interest rate, extending the term of the loan and other options.

Mortgage Refinancing

Mortgage refinancing is an option where the lender would allow you to refinance your existing mortgage to include any late payments and fees. You basically cash out part of your equity in the home in order to regain control of your setback.

If none of these are viable solutions, it’s usually better to sell the house than lose it to foreclosure, especially if you can sell it for more than you owe. If the offer is for less than the amount you owe, your lender can block the sale, but many lenders will agree to a short sale.

Again, it’s important in times like these to communicate with your lender. If you do reach an agreement with your lender, make sure you get it in writing. Before you sign anything, talk to an experienced real estate attorney. For more information on foreclosure laws, go to www.hud.gov.