There are a number of ways that hardships may unexpectedly come and change everything you’ve been working for, including losing your valuable property. With that, it’s highly important to understand the foreclosure process, and how to avoid it.

Perhaps you’ve lost your job or a member of the family got very sick, or maybe you’re undergoing a divorce. Whatever the reason maybe, you have to face it before more problems would result if you don’t take action of protecting your investments and property. You must take action and understand what you can do to mitigate any further damages to your credit report.

Understanding the foreclosure in Minnesota is a good step to do. Below are few examples of how to stop foreclosure on your house:

1. Look for Other Sources. Majority of homeowners don’t realize yet of other resources they may have that can help in paying the mortgage dues. Try to see your unemployment or disability insurance, as well as your savings. You can also make some readjustments in your household expenses, or slashing your budget by trading in your cars, motorcycles or other valuable things for cash. You may also consider of using your retirement funds.
2. Contact Your Mortgage Lender. After reviewing possible sources of cash-flows to pay the mortgage, and yet still found them lacking, it’s about time to contact your mortgage lender. You have to take this step as soon as possible. The most essential goal in reaching out your lender is to form an agreement that will aid your mortgage and later help you stop the foreclosure proceedings before it’s too late.
3. Review the Options. When you’ve already contacted your lender, or sometimes the servicing company that handle’s the investor’s loan, review whatever options available you may have. Mortgage lenders typically don’t make adjustments to loans, but many of them will consider it as a viable (win/win) option, which benefits both the lender and the borrower.

Here are the possible options you may want to discuss with the lender:

• Deed in Lieu of Foreclosure – This is an option in which the lender may agree to return the title of your property. But you’ve to beware. Your lender can sue you for loss and report some uncollected funds to the IRS as taxable income. This is an option that may cause negative effects on your credit report.
• Loan Modification –  This option means the bank agrees to a change in your existing mortgage terms. The aim is to lower the monthly payments, which can either be on a temporary or permanent basis.
• Short Sale – This is widely considered as the most ideal option available to stop foreclosure process. Short sale is now a fast-growing option for homeowners facing financial difficulties. This option means the lender agrees less the total amount than what the borrower owes on the property. Lenders often choose to accept the short sale option as it can considerably reduce the cost and save much time than doing the foreclosure proceedings. In most cases, the short sale option creates much lesser damage to your credit report than that of a foreclosure.

Finally, here’s a caveat: be always cautious when a company offers you a guaranteed solution to stop foreclosure regardless of what you owe. The Federal Trade Commission (FTC) has recently compiled a list of warning signs telling people to beware of scam, in which some companies may pose themselves as “foreclosure fixers”. These said companies will require you to pay for services upfront, telling you to pay your mortgage dues through them, and ask you not to contact your lender directly.

Learn more about the process of foreclosure in Minnesota, call our short sale specialist now!