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Strategy To Stop Foreclosure - Loan Repayment Plan

Aug 27, 2008
Foreclosure is something that many people in the current real estate market are facing for a variety of reasons. However, Foreclosure puts a serious mark on your credit that can prevent you from purchasing another house for an extended period of time in addition to creating larger more wide spread effects on your credit. You also lose your house and you may even be responsible for additional debt if your home's market value is worth less than the amount of your mortgage.

Avoiding foreclosure is something that everyone is going to want to at least attempt and there are a number of ways that can be used to avoid foreclosure. The question becomes exactly what strategy or method to use in order to avoid foreclosure. There are a number of reasons why you may be facing foreclosure.

It is this reason that must first be examined in order to determine which of the strategies are going to be best for your particular situation. You may want to consider refinancing if that is still an option in order to get a better rate and lower monthly payments. There are options such as short sales are also available as well signing the property back to the bank.

There is also the option of a loan repayment plan, which is also sometimes called forbearance. This is one of the best possible ways to avoid foreclosure. A situation where forbearance would be the best option would be one where there was a temporary change in income and where payments could be made but not in the entire amount.

For example, in situations where income might be reduced due to reduced hours. Another situation could be if a single income was lost in a two-income home. There is still money to make payments but not in the full amount. Most lending institutions are going to be willing to consider forbearance in these situations because it is the best option for them as well as for you.

The best thing to do is not to wait. Contact your bank as soon as possible. You will probably have to be behind in payments at least 2 months but less than 12 months in order to qualify for a loan repayment plan.

A loan repayment plan is usually worked out as an alternative payment plan to your existing mortgage designed to provide you with the options of maintaining your account in good standing and still make payments. There are several ways that a loan repayment plan can work. It usually depends on the particular lending institution that you are using.

The first thing to do is to check to make sure that you qualify. Talk to your lender ff you do qualify check to see if you qualify with HUD as well. They have programs, which can help bring your account current to make your loan repayment options even more affordable.

Your loan repayment plan amount will be determined by the rules that your lender has on this type of payment plan. There are some which require that you pay a certain percentage of each months payments, some that simply reduce the interest rates and some that do both. You will need to provide your lending institution with both your income information as well as the information on any debts and bills that you have.

This will assist your lender in coming up with a plan that works out for both you and them. There are some benefits and some disadvantages that are attached to these types of programs. While it is one of the best options for dealing with foreclosure, it may not be the best option for you.

There are a few things to consider when looking into loan repayment plans. The advantages of a repayment plan are if you qualify, you do not have to worry about negative impacts on your credit. You are still going to be making payments and that keeps your account in good standing.

Your payments are going to be more affordable for you for the time of the repayment plan this means that you can deal with what you need to in order to get back on your feet without having to worry about whether or not you are going to lose your home. The disadvantages are the fact that you may not be able to get that much of a reduction on your monthly payments. It depends on the lending institution that you used to obtain your loan.

It may only be a reduction of your interest rate or a removal of your interest rate, which means you, may only be reducing your payments by a small amount. While it may be enough for some, it may not be enough for others. Repayment plans are only good for a short period of time.

They are designed to provide you with a lighter payment schedule for a short period of time until you can regain the lost income. In other words, it is a temporary solution and is not designed for long-term use. This means that you could run into the end of your repayment plan and still need assistance.

Repayment plans can only be used for a specific period of time or they may only be a single use option during the life of your mortgage. This is another disadvantage of course it depends on the lender which one it is. Finally, not all lenders offer these types of assistance programs, which can make it difficult if you end up in need of assistance during the life of your mortgage.

Loan repayment plans can be a welcome relief in many situations when it comes to keeping your home out of foreclosure and putting your mind at ease. They do not however come without their disadvantages despite being one of the best options available to avoid a foreclosure. Any time you are faced with a serious financial situation and decision it is a good idea to research each of the available options to determine which one is the right one for you and your situation.
About the Author
Peter Baptiste is known as the Foreclosure Doctor Online. Feel free to visit his blog where he provides a wealth of information on a regular basis. The Foreclosure Doctor Online
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