Posted: 1 Jan '19

How Can a Bad Credit Lender Help if You’re Facing Foreclosure?

If a homeowner fails to make their mortgage payments, their lender has the right to reclaim the property and sell it to recoup their money. Foreclosure can be an extremely stressful legal process, but it's not the end of the world. Many solutions exist that will allow you to pay off your debt and even remain in your home. Working with a bad credit lender is one way to stop the foreclosure process. Below are three ways a bad credit lender can help you pay your debt and stay in your house.

Power of Sale

A foreclosure is a lengthy process that usually involves multiple lawyers and numerous court appearances. This can add to the financial strain experienced by homeowners with damaged credit. A bad credit lender can help you use the power of sale legal process to sell the property before the lender takes possession of it. A power of sale can usually be completed in less than six months, saving you thousands of dollars in legal fees in the long run.

Second Mortgage

If you'd prefer to remain in your property, a bad credit lender can help you secure a second mortgage on the property. Most second mortgages have "open" terms, allowing you to pay them off as your budget permits. Keep in mind, however, that second mortgages carry a higher level of risk for a lender and therefore have higher interest rates. Working with a mortgage broker is a good way to find a bad credit lender who will approve financing at a rate you can afford.

Private Lenders

Most prime lenders (i.e. the "big banks") will refuse to lend money to homeowners who are in the midst of a foreclosure or a power of sale legal process. This is where private lenders come in. Many trust companies, credit unions, and private individuals act as bad credit lenders and will approve a loan, regardless of your financial situation. Speak with your mortgage broker about whether private lending is the right choice for you.

If you're facing foreclosure, there are steps you can take to keep your home and get back on track financially. Contact us today to discuss your financial situation and learn how a bad credit lender can help you avoid the foreclosure process.