Options for NJ Real Estate Homeowners in Foreclosure

9 alternatives to foreclosure to save NJ Real Estate homeowners

One of the most stressful and complicated decisions a NJ Real Estate homeowner must face is the probability of foreclosure. When it comes to foreclosure, this decision can have long-lasting financial as well as credit impact. Whether the homeowner opts to keep the property or surrender it to the lender, the key is to make an educated decision after evaluating all available options. The following list will present several alternatives for homeowners to consider such as:

  1. Reinstatement

    If there is a temporary reason that a homeowner has been delinquent on payments and until the date of the bank sale. In some states, the redemption period extends past the date of the bank sale. In order to reinstate a mortgage, the homeowner must pay all missed payments including late fees and any legal fees up until the loan’s reinstatement date. The homeowner can submit a reinstatement letter to his or her mortgage company requesting the amount due. A simple reinstatement may also be available requiring a onetime payment of all delinquent funds in full. At the time the homeowner makes the payment, the mortgage is reinstated and regular payments are due as previously scheduled.

  2. Forbearance or Re-Payment Plan

    In the event that a homeowner temporarily missed mortgage payments and is unable to make a onetime payment, a forbearance or re-payment plan may be negotiated. In this option, the lender allows the NJ Real Estate homeowner the opportunity to pay the delinquent amount over a period of time or on the end of the amortization of the loan.

  3. Refinance

    If the homeowner has adequate equity, income and their credit has not been significantly impacted, refinancing may be an option. This may be a short term solution since NJ Real Estate property payments will noticeably increase after the refinance.

  4. Mortgage Modification

    A loan modification can be compared to a lower-interest refinance where the lender will lower an existing loan’s interest rate in an effort to lower payments. In order to qualify, the borrower must submit proof of income and expenses. This is an excellent option for a homeowner to retain the NJ Real Estate property in the event that he or she has the means to afford the entire or majority of their mortgage payments.

  5. Short-Refi

    This process involves refinancing the property with a reduction in the principal balance and typically the interest rate as well. In order to qualify, the homeowner will be required to prove a hardship in addition to demonstrating the ability to pay the new loan. A short-refi is a fairly new process instituted by mortgage companies and lenders in order to avoid property foreclosure.

  6. Deed-in-Lieu of Foreclosure

    Sometimes referred to as a friendly foreclosure, a Deed-in-Lieu of Foreclosure occurs when the homeowner renounces the deed to the bank in an effort to avoid the prolonged process of foreclosure.

  7. Bankruptcy

    In the event a homeowner decides to declare bankruptcy, the foreclosure process may be stopped, allowing the homeowner to sort out debt and retain the property. However, in most cases, the homeowner will still not be able to make payments and the lender will wind up foreclosing. In addition, once bankruptcy is filed, selling the home is nearly impossible.

  8. Sell or Rent the Property

    In reference to selling, if the homeowner has equity in the NJ Real Estate property, he or she can sell it and in turn evade foreclosure. Similarly, a homeowner threatened by foreclosure can rent the property to keep up with payments if the mortgage payments are low enough.

  9. Short Sale

    When all other efforts fail, the homeowner has the option of short selling the property instead of foreclosing. A short sale is a sale of NJ Real Estate in which the gross sales price falls short of the balance needed to satisfy all liens secured by the subject property. In this case, the lender decides that it would be more beneficial to sell the property at a reasonable loss rather than foreclosing which can incur many fees on the bank and further damage the borrower’s credit.