When you fall behind in your mortgage payments on your Philadelphia, Pennsylvania home, it can feel like you’re drowning in debt. Even if you’re able to make your monthly payment, catching up on a past due balance can be an overwhelming challenge.
There are a few options that can help you to avoid foreclosure in Philadelphia and possibly keep your house or condo, even if you’re seriously behind in payments. Lots of properties in Philadelphia have been lost to foreclosure, but there are many ways to avoid it.
1. Bankruptcy
This is usually the tool of last resort. If you’re being crushed by lots of debt, bankruptcy can be a good way to negotiate with multiple lenders at once. It’s a lot of work, and it won’t help you avoid your mortgage. Different lenders will treat your circumstances in unique ways. You’d benefit from serious professional help – the best you can afford.
2. Reaffirm
This can be a good card to play, but it may come with some unseen penalties. Basically, reaffirming the loan is an additional commitment to pay. In some states where it’s allowed, an affirmation can create additional liabilities if your property is auctioned.
3. Making Home Affordable (MFA)
If your mortgage qualifies, you might be able to participate in MFA. Any loans backed by Fannie Mae or Freddie Mac must be considered for MFA, and other lenders may choose to participate.
With MFA, your payments and/or interest rates might be lowered – even the principal balance (if your home is worth less than you owe). If you’re unemployed, you might be able to get your payments temporarily suspended or reduced.
MFA is a government program, so be prepared to deal with lots of paperwork. It isn’t free money – you have to work for it.
4. Negotiate with Your Bank
Many lenders routinely offer some level of assistance. You have to work hard at it, but you might be able to get your interest rate reduced or a temporary reduction in your payment.
Most of the time, lenders will want to steer you to refinance your loan – but by the time you’re a few payments behind, you probably don’t qualify for a reduction in interest rate.
You have to work really hard to negotiate with a bank. Usually, it takes lots of calls and the patience of a saint to get through the bureaucracy. Never, ever act rude. Ask for help from everyone you speak with, but don’t sound desperate. Explain your situation, offer supporting documents, and reassure the bank that you want to live in your home for the long term.
If you need a temporary fix and want to stay in your home or condo, most banks can be forgiving. Sometimes they’ll be willing to add a few months of payments back onto the primary balance of your loan. It’s all dollars and cents to them, so remind them that you need their help to give them a lot more money in the long run. If they have to sell your house at a foreclosure auction, they’ll take a huge loss.
That sounds obvious, but for some reason bankers seem to forget it when saying no to someone in need of help.
5. Sell Your House Fast to a Home Buyer with Cash
If you’re behind in your payments and need to sell fast, we can help. At Mike’s Cash for Homes, we buy houses in Philadelphia, Pennsylvania, and can provide you with a fair, all-cash offer for your home. Connect with us today to discuss your situation and explore your options.