The Risks and Rewards of No-Doc Mortgage Loans

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If you need to avoid foreclosure you are not alone. Thousands of people are facing foreclosure every single day. Many people feel like they are out of options at this point and do not know where to turn. As long as you have not turned the property over to the bank, it's not too late. There is always time for one last effort if you're willing to work. Here are a few ways that you can try and avoid foreclosure on your home.

1. Negotiate with the Bank

The first step that you will want to take is negotiating with your bank. If they hold the mortgage on your house, they are in a position to lose a substantial amount of money. Therefore it is in their best interest to negotiate with you to keep you in your house. The last thing they want to do is get a portfolio full of real estate. They are not in the real estate business and they have no desire to get into it. When they repossess a house, they will undoubtedly lose a lot of money on the deal.

Talk to them about your remaining options. They might lower your interest rate, lower your monthly payment, or get rid of any past due balances. Banks deal with foreclosures all the time and they usually have several options to choose from. If they believe that you have made the necessary changes in your life to start making payments again, they will do everything in their power to work with you.

2. Use Hard Money Loans

Hard money loans are commonly used when people are in distressed situations. While it might seem unbelievable that anyone would loan you money when you're facing foreclosure, hard money lenders do it all the time. Hard money lenders are private individuals that have money to lend and seek a higher-than-average return on their investment. They know that people facing foreclosure are in a desperate situation. They also know that when you are desperate, you agree to whatever will help you get out of the situation you are in. Even if this means agreeing to a short-term loan that will charge you three times the normal amount of interest for a mortgage, you will agree to it.

Be aware that hard money loans are only there for a temporary solution. If it gets you out of facing foreclosure, then it is well worth it. However, it is not meant to last any longer than you need it. Once you can secure a traditional mortgage again, go for it. 

3. Short Sale

A short sale also involves working with your bank for an alternative solution. You'll have to talk them into taking less money than is owed on the property. Banks may or may not be willing to go for a plan like this, but it's worth a shot. Ask them if they would be willing to do a short sale on your house and help you avoid the foreclosure process.