Does this narrative sound familiar?
Your lender has turned up the heat. The calls keep coming and you don't want to answer your phone. It seems likely that you're going to lose your home to foreclosure soon. Well, relax; it is not the end of the world. You CAN prevent foreclosure and regain your peace of mind. In just a minute, we'll explore some different ways that you could prevent foreclosure. We'll also discuss ways that could help stop foreclosure after the lender has initiated the process. But first:
Are you sure you want to keep your home?
All across this nation, real estate prices have plummeted. In many cases, homes are now worth only half of what they once were. If you now find that you are "upside down" on your home loan, (you owe more on the home than it is worth) perhaps you should ask yourself,
"Do I really want to stay in this property?"
If the answer is "No", you should delve into the option of a short sale or a deed in lieu of foreclosure.
On the other hand, if you have even a small equity in the property and you would rather not move your family, it may very well be worth your effort to try to prevent foreclosure.
Analyze Your Situation
Before contacting your lender, you should first have a solid understanding of your own financial picture. Write down a list of all expenses. Which things on this list could you eliminate right now? Less dining out at restaurants, watching a rented movie at home versus going to the theater, or maybe brew your own morning cup of java instead of stopping at Starbuck's? If you can show your lender that you are handling your money responsibly, it is more likely they will cooperate with you.
Next, jot down every source of income for your family. Now list any assets that you might quickly liquidate. If you are only falling a few hundred dollars short on your budget each month then it is quite probable you can prevent foreclosure on your home. If, however, you find that you're hopelessly in debt then trying to stop foreclosure may not be feasible.
You might be able to prevent foreclosure by earning a few extra dollars each week. There are a number of programs available to work from home and earn a little extra income. Be sure to do your homework, though, as there are also many "get-rich-quick" scams around. Look for part-time job openings near your home. This can save you considerable time and commuting expense. If your home is important to you it would be well worth the extra effort to stop foreclosure by earning a little extra.
Dealing With Bankers
If your financial crisis is due to a set of temporary circumstances, you might be able to negotiate directly with your mortgage lender to get a forebearance agreement to bring your payments up to date. This involves making an additional catch-up payment each month for several months. Many borrowers don't like this option, as it puts undue strain on their budget.
If your mortgage payments are now so high that you truly cannot afford your home any longer, you will need to bring the mortgage payments back to an affordable level by seeking a loan modification to resolve the problem, or qualify for a refinance loan with lower monthly payments. The alternative is to move on to more affordable housing.
If you could use some help figuring out the best course of action for your individual situation, you can speak with a foreclosure specialist. They typically offer a free consultation and they often come up with options you had not considered.
There are also good resources available on our website, including "do it yourself" stop foreclosure handbooks that will provide you with the information you need to make these decisions.
Remember, the first step to prevent foreclosure is to let your lender know that you want to work something out with them. They usually only have a limited amount of time in which they will negotiate before they proceed with the foreclosure process. You must act quickly in order to prevent foreclosure.
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James Sopher is a retired real estate professional and free-lance writer.
For more detailed advice on how you can prevent foreclosure on your home, visit Prevent Foreclosure
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