Understand the Terms Used in Foreclosures - A Lesson in Lingo
Foreclosures are tricky business. To help you out, here are some common terms used in the foreclosure process and their definitions.
Foreclosure Lingo 101
When you want to keep your home, this is known as working with your lender to allow for retention. Retention basically means that you're going to be able to keep owning your home. There are many ways to do this, including reinstatement, forbearance, repayment plans, and loan modification.
Reinstatement is a lump-sum payment is made to catch your mortgage up. Your lender might agree to this, but there may be fees and other costs associated with this process.
Forbearance is essentially a chance for you to suspend or reduce your payments for any period of time to allow you to get back on track. This is often combined with a repayment plan or reinstatement to make up for the missed payments.
A repayment plan is a plan that you will set up with your mortgage on her that allows you to repay what you owe from missed payments. By combining the past due balance with your monthly payments, you can have an affordable solution to get back on your feet.
Loan modification is essentially a way of changing your loan. This could be a change in the amount of your monthly payments, changing the interest rate, or a change in the term of the loan. Your lender will decide what options you are going to be offered to make the payments more affordable for you.
With Avoidance Is Not an Option
In the instance that you cannot settle on a plan for avoiding foreclosure, there are some liquidation terms to consider. Rather than facing foreclosure, you can elect for a short payoff, an assumption, or a deed-in-lieu of foreclosure.
A short payoff is essentially a pre-foreclosure, which will allow you to sell your house for less than what you owe and pay off your mortgage company, with the excess written off.
An assumption will let someone take over your mortgage and make the payments, even when the mortgage isn't supposed to be able to do that.
A deed-in-lieu of foreclosure basically means that you volunteer to give your mortgage back to the lender. It essentially cancels your mortgage, and looks better on credit than foreclosure.
With this information, it might be a little easier for you to understand the foreclosure process. For more on foreclosures, check out the rest of our site for other resources and information.