How can you stop a forclosure on your home?

Question

My parents have desperately been trying to hold on to there home but it is becoming more and more difficult to make the payments. It has been on the market now for close to two years, with no offers. My parents are now saying,They have to let the house go they can not afford it. They both have professional careers, is there a way out for them without losing their dream home?

Answer 1

They can refinance to a lower rate. That might help them afford their payments. If that is not possible, they need to sell and move somewhere more affordable.

If they have been on the market for 2 years it doesn't take a nuclear physicist to conclude that they need to lower their price to one where the market will respond, even if they have lowered it many times before. Many people are "chasing the market."

They can also lower or eliminate other expenses to make room for the house payment.

I hasten to add that if you are paying for, but cannot afford, your dream house, it isn't your dream house. It is your nightmare house.  

Answer 2

No, there is nothing they can do if they cannot make the payments.

Let your parent's mistake be a very, very important lesson to you.

Your parents took out what is called an adjustable-rate-mortgage.  They did this because they either didn't want nor couldn't afford the home on a fixed rate that would not change.

When you do this, you are gambling with the market.  They were hoping it wouldn't change (and no one can predict if it will go up or down), and the interest rates went up and that is why they can no longer make the payments.

When you get old enough to buy your own house, if you are going to be in the house for more than 3 years, if you cannot afford the house on a fixed rate, then you cannot afford it at all.

Answer 3

It sounds as if your parents purchased a nightmare rather than a dream.  You do not indicate why they cannot make the payments.  Did the purchase the home with an ARM rather than a fixed rate mortgage ?  If so, they may be able to ask for an obtain a loan modification, extending the term of payments and possibly lowering the interest rate to a fixed rate.

Advise them to phone the loss mitigation department of the lender involved to ask for options to avoid foreclosure.

Answer 4

The others answers were really into the lecture - I'll skip the lecture and actually answer the question.  The only way they can keep this house is to refinance into an affordable payment (difficult to do since I'm guessing they don't have a fixed rate and can't even afford the interest on their home - plus more people owe more than their homes are worth than ever before).  

If this can't be done, then they cannot afford the house and have to get out.  Sounds like the dream home is really a nightmare (couldn't resist after seeing that in 2 other answers :)  

If they decide that they need to get out then they have to do one of the following things.  In order of least damage to your credit to most damage to your credit...

1.  Sell the house for enough money to cover what is owed.  

2.  Sell the house and bring cash to closing to be rid of it.

3.  Short Sale (get the lender to agree to take less than the full amount owed for satisfaction of the mortgage note).  

4.  Deed-in-lieu of foreclosure ('voluntary' foreclosure).  

5.  Full fledged foreclosure.  

6.  Bankruptcy stalls the foreclosure process by having a judge sort out whether or not the homeowner can afford to 're-affirm' the debt.  (Sounds like this isn't appropriate for your parents right now).

good luck!