Foreclosure Avoidance: Spreading Payments Over Longer Terms

Foreclosure occurs when a homeowner stops making payments to his or her lender. The lender goes to the court to request that the foreclosure process be started. The court may determine the need to seize the property and sell it. The proceeds from the sale of the property are used to repay the loan. The lender gets his money back and the homeowner loses his home. However, it may be possible to avoid this by extending the terms of your loan.

Spreading Out Payments

One of the ways you can avoid foreclosure is to refinance your home loan, or work with your lender to modify a current loan, so that the terms are extended. This means that you will pay back the loan over a longer period of time. Here is why it can be beneficial.

• The length of time you will repay the loan is longer. This does mean that you will pay interest on the loan for a longer period of time.
• Because the length of repayment is longer, the amount you will pay each month is smaller.
• This makes making monthly payments more affordable to the borrower, which in turn can help him to avoid foreclosure.

Nevertheless, keep in mind that you do need to maintain the loan. If you spread out payments over long terms like this, you may in fact have a lower payment, but you still have to make that payment. Lenders may also be willing to work with you to spread out missed payments over a longer period of time, such as requiring you to pay an additional amount each month until the missing payments are caught up.

Get Legal Advice

If you are unsure how to avoid foreclosure, speak to an attorney. The attorney can work with you and your lender to find a solution to help you to stay in your home.