How to Avoid Foreclosure
1.) Don’t; under any circumstances ignore your problem. If you do, and you want to save your home, you will have a more difficult time getting your loan reinstated… increasing the likelihood that you will lose your home.
2.) Contact your lender as soon as you know you are in trouble even if you don’t want the home. The last thing a lender wants is your home. In most cases, they will have options to help you overcome your dilemma. Prior to calling, make sure that you are prepared.
3.) Open and respond to all mail from your lender. Typically, the 1st notices you receive from your lender will offer good information about the foreclosure prevention options you have. Subsequent correspondences may include important notices of pending legal action. Not opening the mail or saying that you did not receive it will not be an accepted excuse in foreclosure court.
4.) Know your mortgage rights and the terms of your mortgage. Your loan documents will contain a list of actions your lender can take if you cannot make your payments. You will also want to learn about the foreclosure laws in your state. You can do this by visiting your states website.
5.) Understand your options. Depending on your timeline and your main goal, you may have multiple options to choose from.
6.) Prioritize your spending. There are 2 main items you should be concerned with; healthcare and your mortgage in that order. Transportation comes third. Beyond that, you should eliminate as many optional expenses you have (cable TV, memberships, entertainment, other non-essentials). You should even delay credit card payments and payments on other “unsecured debt” until you have your mortgage payment.
7.) Use as many of your assets as possible. If you have a second car, jewelry, or even a whole life insurance policy that you can sell for cash… do so. Remember, your mortgage payment is priority number one (behind healthcare).
8.) Income is what matters (Even if you want to sell). If you do not have a source of income, you need to gain employment… even if it isn’t in your area of expertise. Is there another person in your household that isn’t working that could be? Even if these efforts don’t generate enough income to pay your mortgage in full, it does show your lender that you are making a good faith effort to fulfill your obligation, and your lender may be more apt to work with you.
9.) Avoid foreclosure prevention companies and scams. You don’t need to pay exorbitant fees for foreclosure prevention help. The $1000’s people pay to these types of companies should be used to pay their mortgage. You also want to avoid signing a legal document without first reading and understanding the terms and getting professional advice from an attorney or trusted real estate professional, or an approved housing counselor.
10.) Follow a plan. In almost all cases, there will be more than one option available. Follow a logical plan in order from most desired option to least desired (last resort).
