Facing foreclosure, whether the process has already started or it will most probably start soon, is devastating in many ways. Your credit score goes down, you feel insecure and fear for the future and don’t realize there is something that can be done. Most people have no idea what steps to take and a large majority of foreclosures could be stopped if the right steps are taken at the right time.
Taking steps to stop the foreclosure process should be done as soon as you know you are behind on payments. Time is not on your side, so the quicker you act the more chance you have of keeping your house. Acting quickly means to contact your lender. They want to work with you; they do not want to own your house. They are not a real estate company, they are a lending company. You need to know your options to fight home foreclosure.
• Don’t ignore mail from your lender. It will have good information about foreclosure prevention options which you may be able to use. If too much time has passed, the mail will have legal notices that you also need to know about.
• You have mortgage rights. Read your document to know what action your lender may take. Each state has different foreclosure laws so contact the State Government Housing Office and find out what the laws are.
• There are foreclosure prevention options that can be gotten from the U.S. Department of Housing and Urban Development (HUD). They will give you free or very low-cost advice. Their counselors will help you understand your options and the law, organize your finances and represent you in negotiations with your lender.
• Make a budget where you prioritize your spending. Write down expected income and expenses for the next several months. There may be places where you can trim spending and make it possible to make smaller, refinanced payments on your mortgage. It may be possible to skip payments on some bills to make payments on your mortgage, especially if your financial hardship will be remedied soon. Credit card debt can be refinanced to give you more cash flow.
• You may have assets that you have not considered using. Saving your home may be the time. Jewelry, a second car or a whole life insurance policy could be sold for cash to reinstate your house loan. If someone in your family can get another job, it will demonstrate to the lender that you are trying your best to keep your home.
• Foreclosure prevention help is free. You don’t need to pay fees for it. Save that money to make payments. Some companies will promise to negotiate with your lender, and even though they are legitimate businesses you will have to pay a large fee, sometimes equal to several mortgage payments. HUD approved housing counselors and your lender will give you the information for free when you contact them for help.
• Some foreclosure recovery companies are scams and if you sign with them you may well have signed over your house to them. Be sure the person or company you are working with is a HUD-approved housing counselor.
• If you are still in the beginning stages of missed payments and your credit rating is still intact you may be able to get refinancing for your loan. You need to be careful that you are not just postponing the inevitable with another loan you cannot repay. Ask an experienced mortgage broker who is affiliated with the National Association of Mortgage Brokers.
• Think about selling the house. If you still have some equity this is a better option than foreclosure. If you take this option early enough you may be able to offer the deed to the house and your lender agrees to release you from your mortgage. You avoid any deficit you owe and the lender avoids legal costs needed for foreclosure.