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By Jennifer Walter
Receiving a notice of foreclosure can be a stressful situation for any homeowner. But before you start panicking, it is important to remember that a foreclosure notice is just that: a notice. While the chances that your mortgaged home can be seized and sold by your creditors is a lot higher now, you are still given some time to look into a number of different options in order to prevent this from happening.
One of the first options you should always look into is to find ways and means to be able to pay off the debt you have with your creditors in order to prevent the foreclosure to be processed and save your home. Some homeowners are able to meet up with their creditors to make some adjustments and arrangements on their payment schedules which are both amicable on the part of the creditors at the same time light enough for the borrower to be able to meet each payment deadline on time and with ease. Other homeowners facing foreclosures are able to take out other loans in order to pay of the mortgage where they had used their home as a means of collateral. In other situations, particularly when the reason for the failure of meeting the payment schedules and amounts agreed upon by the creditors and the borrowers is due to illness or natural calamity, the homeowner facing a foreclosure notice is able to get the financial help they need from their family members.
Despite all the possible options available for many homeowners to save their homes from a foreclosure, there are some cases where the homeowner simply does not have the means in order to pay the outstanding debt he or she has with his or her creditor in full and would need to part with his or her own home. Foreclosed properties tend to sell for a lesser value than its real worth. When this happens, homeowners who have to face a foreclosure would not only lose their home. They would also be unable to have any sufficient funds to get a new place to live since they would still need to settle the remainder of the debt.
Converting your home into a homestead through the form of a declaration may not necessarily be able to save your home, especially if your home has a market value of over $125,000. The good thing about declaring your home as a homestead is that when your home is sold as a result of a foreclosure, you are immediately granted the first $125,000 of the funds that have been gathered as a result of the sale of your property. This amount that would be awarded to you would allow you to make a fresh start by providing the funds you would need to find a new place to live so that you do not become homeless after the sale of the property as a result of a foreclosure.
On the other hand, converting your home into a homestead may be able to save your home from being sold as a means for your creditors to be paid the outstanding debt you owe to them which cause the notice of foreclosure to be issued. This is because when you convert your home into a homestead and the market value of your home is below $125,000, your home cannot be sold in order to satisfy any outstanding debt that you may currently have with your creditors.
There are, however, some limitations to just how much help can converting your home into a homestead can prevent your home from being foreclosed and sold. One such limitation is the kind of debt that you owe. If you currently owe some outstanding taxes or outstanding debts towards individuals or companies that have made improvements to your home, converting your home into a homestead would not be able to prevent the foreclosure from taking place.
Another limitation would be based on the terms and conditions of your contract with your creditors. There are some contracts whereby the creditor may provide some conditions with respect their eligibility to seize your home. If your mortgage contract stipulates these provisions, it would be of no help to convert your home into a homestead.
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