3 Unconventional Ideas to Avoid Foreclosure

When your house has gone into default, you want to avoid foreclosure as much as possible. To make matters worse, your credit score will be negatively affected as well. While most people think there is not much you can do in the event of an impending foreclosure, there are some last-ditch, unconventional efforts that can be made to try to hold on to your investment.

1. Hard Money Lenders

Hard money lenders are not quite as strict as loan sharks, but they work in a similar way. They regularly loan money to those that are in distressed situations. Foreclosure is just one of the many distressed situations they may be willing to lend for. The important thing to realize is that hard money lenders loan money based on the value of the property. Therefore, if your property is worth something, they may be willing to help you out. The catch with these loans will be the high rates and fees.

Also, with a hard money lender, you will most likely have to agree to a balloon loan in order to get the money that you need. This means that you will make only interest payments during the body of the loan and then repay the entire loan amount at the end of the term. Typical terms are only one to two years, so this is not a long-term solution. The object of this maneuver is to avoid foreclosure and that is exactly what you can do. Once you do, you will want to find a way to refinance as soon as possible.

2. Fundraiser

An often overlooked source of funds is your family and friends. In order to do this, you don't have to have a big official event like other types of fundraisers. The idea is just to ask around and see if anyone can help you. Many times, a foreclosure is the result of some sort of unexpected circumstance in your life. It may be the result of losing your job or a severe medical condition. If you have been the victim of some sort of tragic circumstance, people will probably be willing to help you.

Ask your parents, grandparents, siblings, and anyone else you feel comfortable asking. Let them know that the money is need for the short term, until you can secure other financing options. Use a promissory note and file a deed of trust against the property.

3. Ask the Bank For Help

Many people think of the bank as a cold, heartless organization. However, sometimes they are willing to help you. They might change the interest rate for you or come up with another method to help you keep your house. More and more banks are willing to help borrowers. In fact, many banks have reduced loan balances to make payments more affordable.

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