Finally, after 10 years working overseas, you now have a house you can call your own. Since you cannot pay for the entire amount in full (and don’t feel bad about it), you decided to sought help from a bank and applied for a Housing Loan payable in 15 years.
Unfortunately, things got bad in the country where you are working and you are one of the many workers sent home. Worry and fear started to sink in, including the fear of losing the house you called your home. Surely, you don’t want the bank to get the property you invested in.
What can you do to avoid foreclosure?
Keep in mind that foreclosure is not automatic. Lenders follow a procedure to ensure that homeowners will be given a chance to keep their property while being able to pay for the financial obligation.
Here are several ways you can do:
1. Contact your lender immediately.
Believe it or not, lenders would want to avoid foreclosure as much as you do. It can be a gruesome process, which explains why there is a dedicated department who can process foreclosure because they don’t want to be burden by it.
In case you are having financial difficulties, make sure you inform your lender immediately. Don’t make matters worse. The earlier you can talk to them, the earlier you can figure out ways on how you will be able to avoid foreclosure and keep everyone happy. Lenders are willing to reconsider terms in your mortgage such as partial payments, lower interest, or longer term.
Still, keep in mind that you will only have better negotiating power if you are in good relationship with your lender. Be nice and maintain an account with them.
2. Sell your house for a profit.
Yes, that is your dream home, but when there is danger of losing it, sometimes, you have to let go.
Take pictures of your home and post an ad online (make sure it is public too!). Ask friends and relatives to share your ad so many people can see it and increase the possibility of sale. Once sold, use the proceeds of the sale to pay off your loan.
What if you don’t want to sell your home? That’s fine. There are other ways you can do to salvage it, which will be discussed further below.
3. Refinance or restructure your loan.
Perhaps the interest rate is killing you, which is why you are unable to commit with the monthly amortization. Then you found out that another bank is offering a housing loan with lower interest rates.
You can try refinancing to avoid foreclosure. This means another lender will assume your loan for more flexible payment terms and lower interest rate so you can better manage monthly amortization. The proceeds of your refinancing loan will be used to “pay off” your loan with another bank.
Take note that this option is only applicable IF you haven’t defaulted yet. Otherwise, the next option would be more feasible.
4. Declare bankruptcy.
This may sound embarrassing but believe it or not, there’s nothing to be ashamed of when you declare bankruptcy.
Generally, lenders will make necessary demands before foreclosure is filed. Once the foreclosure proceeding is in play, the lender will go after your property to satisfy the obligation. Declaring bankruptcy will stop that from happening. In fact, lenders can only go after your home once they receive permission from the court to do something about your property. This will give you ample time to organize your finances and hopefully, you can use this time to pay off your financial obligation.
5. Earn additional income.
Extra income means better ability to make payments. Ask the Filipino community in the country where you’re in for any job opportunities that they can refer you. Encourage your spouse to earn additional income as well since this could help in paying off your housing loan.
Still, prevention is still better than cure. You can avoid this scenario by adjusting your lifestyle. getting rid of unnecessary habits, avoiding sending balikbayan boxes every month, and encouraging your family back home to contribute to saving and living a simple lifestyle. These little steps could go a long way to avoid your home from being foreclosed.