I Don’t Qualify For Forbearance. What Are My Options?

A sudden job loss or market instability can flip your entire world upside-down, threatening your ability to stay on top of mortgage payments. There’s no doubt, life as we know it has changed drastically. Given we’re amid a pandemic, homeowners require financial assistance now more than ever. 

Some individuals qualify for forbearance, which is when the lender suspends or reduces your mortgage payments for an agreed period while you adjust financially. Depending on your lender, you will be required to pay back missed payments either gradually over time or at the end of your mortgage. 

Unfortunately, it’s not so simple, and forbearance may not necessarily be the best solution for everyone. Not everyone will be eligible, and it’s important to know what your options are should you not qualify for it. Keep reading to find out what alternatives are available to you. 

Talk To Your Lender 

Depending on your loan servicer, you may be able to discuss other options. If you have been consistent on your mortgage payments and simply cannot afford your payments anymore due to financial hardship, there may be other options available. Before speaking with your lender, be prepared with your income, expenses, and the total equity in your home. 

Short Sale

Your lender may allow you to sell the home before it forecloses on the property, agreeing to forgive any shortfall between the sale price and the mortgage balance. This method would avoid a damaging foreclosure entry on your credit report. 

Deed in Lieu of Foreclosure 

With this option, you voluntarily transfer your property title to the lender; based on their agreement, in exchange for a cancellation of the remainder of your debt. Although you lose the home, this option can be less damaging to your credit report than a foreclosure. 

Bankruptcy

Personal bankruptcy is generally considered the debt relief option of last resort due to the long-lasting results. A bankruptcy stays on your credit report for ten years and can make it challenging to get credit, buy another home, and get specific insurance in the future. 

However, it is still an option if you are ineligible for forbearance and can offer you a fresh start if you and your lender cannot agree on a remedy.  

Sell To Homebuyers

Though there are options available to you, they may not be the most ideal if you don’t qualify for forbearance. By selling your house, you can avoid all the hassle and stress that comes with trying to get loan modifications. Depending on your situation and timeline, selling to a home buyer company can be your best option. 

These companies are entities that buy your house outright and all at once, without the need for lender financing. Selling your house to a home buyer company will allow you to skip the lengthy repairs and arrange a more flexible closing timeline to coordinate with your move to another residence. 

Selling a home traditionally can be a complicated process due to the numerous parties involved, negotiations, commissions, and lengthy waiting periods. 

A reputable home buying company will provide a great deal of relief and ease in the sales transaction, providing you with a cash offer, or in some instances, they will offer mortgage credits. Selling your house for cash to a home buyer company is a financially sound and beneficial decision. 

If you don’t qualify for forbearance or mortgage relief programs, selling your home to a home buyer may help you get out of your financial stress and start fresh when no other options are available.

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