10 Tips on How to Avoid Foreclosure

If you’re unable to keep up with the mortgage payments on your home, there is a risk that your lender will foreclose on the loan.

This means that the house or apartment will no longer be yours, and you will be evicted!

If you act quickly, however, there are a number of steps you can take to help prevent this from happening.

Keep in mind that mortgage companies don’t actually want to take over people’s properties – they would much rather see borrowers stay in their homes – and are often willing to work out a deal, at least temporarily.

Here are 10 Tips on How you can avoid foreclosure:

1. Contact your mortgage company if you can’t pay: It is very important that you call your lender as soon as your personal financial crisis gets so bad that you’re looking at missing a mortgage payment. The earlier you do this, the better.
2. Get impartial, free advice: The Homeownership Preservation Foundation (call them on 1-888-995-HOPE) can also advise you about how to talk to your lender and what your options are. Alternatively, you can get help and advice from the Department of Housing and Urban Development (HUD). Find a HUD-approved housing counselor near you or call 1-800-569-4287.
3. Open and respond to any mail from the lender: Early on in the process they will send you advice on how to avoid foreclosure and hold on to your home. If the problem escalates, you will receive letters about impending legal action and court appearances. If you respond promptly and take the action suggested, the lender will be more inclined to see you as an honest and co-operative customer.
4. Stay in your home: If you move out you might not qualify for assistance, so it’s best to stay put while the problems are being sorted out.
5. Be aware of your mortgage rights and obligations: Study your mortgage papers to see how your loan issuer is entitled to act if you miss any monthly payments. You should also find out about the foreclosure laws and procedures that apply in the state where you live.
6. Understand your options: Depending on your situation and your lender, there may be a number of options available to you. For instance, the mortgage company could offer you a repayment plan or a modification of the loan terms, or if that doesn’t work they might agree to a short sale or a deed-in-lieu. For more details see Your Options When You’re Facing Foreclosure.
7. Watch your spending: Along with healthcare, keeping your home should be your top priority. In other words, you need to get used to spending less on other things like entertainment, cable TV, memberships and eating out in order to avoid being made homeless. Also, don’t forget that paying your mortgage is more important than your credit card and other unsecured debts that are cancelled if you go bankrupt.
8. Cash in your assets: Do you have stocks, jewelry, a car or other assets you can sell? Clean out your house and have a garage sale or sell some things on eBay to raise cash. Get a second job to bring in a bit more. Even if you don’t raise enough to get out of trouble, it shows the lender you are trying.
9. Don’t pay for foreclosure prevention: You need every penny to pay the mortgage with, so don’t deal with companies that promise to negotiate with your lender and charge you hefty fees. You can deal directly with the bank or mortgage company, or speak to a HUD approved housing counselor.
10. Beware of foreclosure recovery scams: There are companies that say they can act on your behalf to stop your foreclosure. Be very wary, as this often means you have to sign over the property title to the company and then pay them rent every month in order to stay in your home. In other words, you lose the house or apartment anyway! Never sign any legal documents without consulting an attorney or a reputable real estate professional with experience in this area.

If you really can’t stop heading for a foreclosure, make sure you are aware of the potential alternatives to foreclosing.

Related posts:

1. Alternative Options When You’re Facing Foreclosure