What Alternatives are There to Foreclosure in Florida?

The Sunshine State currently ranks second in the United States in foreclosures, and experts say  this trend is here to stay.  Because of the pandemic, homeowners had some protection from state and federal legislation. But, these have expired, and foreclosure numbers are rebounding in Florida. 

If you find yourself facing a possible foreclosure, you have options. Below are some options that may allow you to keep your home. 

Refinancing Your Home 

Refinancing means that your current mortgage is replaced with a new one. This option can be helpful because it allows you to refinance with a better interest rate or lower your monthly payments. Sometimes, the terms of the mortgage may be better for you. Extending the loan duration may lower your payments and help you confidently afford your home. 

For this to be viable, your credit score typically needs to be good, your debt load needs to be light, and your home’s appraised value should not have dropped since your original mortgage. One of the drawbacks to refinancing may be the closing costs you incur. 

Modifying Your Loan

Another option to aid you in avoiding foreclosure is loan modification. Loan modifications, while complex, may serve you well. Your lender may allow changes to be made to your current loan, such as interest rate and adjustments to the principal amount due. 

Once you submit an application to your lender for a loan modification, you will likely be asked to present a debt-to-income analysis to ensure that you can afford the new terms. The creditor may also check your credit score, pay stubs, and proof of assets. This process is often complicated, and it can be helpful to have an attorney help with the process.

Deed-in-Lieu of Foreclosure

You will be required to move out of your home by choosing this option because the bank now owns it. But it can save you the headache of foreclosure as you can avoid litigation. It can also protect your credit score so that you can more easily find suitable housing after the fact.

It is crucial that you weigh the benefits of choosing this option with the risks. You could cover the remainder of your mortgage by listing your property and selling it yourself. Deed-in-lieu of foreclosure is not the first choice you should consider when trying to avoid foreclosure. If you take this path, you will need a foreclosure defense attorney to navigate the process. 

Short Sale

The lender may approve a short sale when a homeowner cannot afford their mortgage. This means that they may be able to sell their home, but the amount it is sold for will not cover the entirety of the mortgage. 

Banks may agree to this option because it allows them to avoid expensive foreclosure procedures. They want to avoid the responsibilities that come with homeownership, so foreclosing on your home means extra work and money for them. They may be willing to accept less of a payout than the loan is worth if it makes sense to them financially. 

Bankruptcy

If you decide that your debts are insurmountable, bankruptcy might be your best chance to get out from under all of your debt. If a foreclosure by your mortgage holder has already begun, a Chapter 7 or Chapter 13 bankruptcy will automatically stop the process. Once you have filed for bankruptcy, your creditors can no longer lawfully contact you. 

If you have equity in your home, a Chapter 7 bankruptcy will allow you to keep that money. You will not be required to repay your lenders with it. A Chapter 13 bankruptcy allows you to repay your debts with a plan that makes it possible for you to do so. Since some of your debts may be discharged, you may have the financial means to pay your mortgage. This could allow you to retain your home. 

Your Next Steps are Critical

If you are facing foreclosure, your next steps can be vital to your future. Contact Sharmin & Sharmin Attorneys at Law for answers to your foreclosure-related questions. We can help you sort out the best option for you and your family.