Financial Tips,  Housing Tips

These Options Can Help You Avoid Foreclosure & Keep Your Home

You may be faced with the reality that you can’t pay your mortgage payments after losing your job or when you fell into hard times. It can be distressing and disturbing when the thought of losing your home comes through your mind. If you fall behind or can’t make your payments, banks can foreclose on your home. Losing your home to anything is scary. You will be forced to relocate and it will also have an effect on your credit and ability to buy a home in the future. Many times, our financial hardships are temporary. Don’t let these setbacks ruin your financial future. As a homeowner, do everything you can to avoid foreclosure.

How to avoid Foreclosure

The following helpful tips are aimed at helping you take control of your situation and to also prevent foreclosure on your home:

Contact your lender

Be proactive and speak to your lender regardless even if you are not experiencing financial crisis or you are on the verge of it. They may be able to provide assistance for you. Banks use many government programs to help homeowners facing difficult financial times. There are banks that have their own programs used to offer assistance. You may be eligible for loan modification or other work-out arrangements through these programs. Foreclosure on your home can be prevented through making contact with your lender. 

Don’t ignore the problem

The worst thing that you can do is ignore the problem and hope it will go away. It won’t. Open bills and notices that you receive in the mail. Answer the calls from your bank. It is hard to face mounting financial debt, but your situation is not hopeless. Take control of the problem and show your lender that you are seeking a resolution.

Read your mortgage documents

It is important for you to read your mortgage documents even though it sounds cumbersome. You will be given greater insight as to what your commitment is and what options may be available in the event that you fall behind when you read them.

Prioritize your spending

Making your mortgage payment each month should be your top priority. Start by taking a good look at where you spend your money. Cut out any unnecessary spending on things that are not necessary. While electricity is essential, cable TV may not be. Find ways to save money on items that your family needs, such as food and personal items. While it may only be a few dollars here and there, it will add up. Negotiation concerning your payment arrangements and extensions can be made with other creditors and this will allow you to focus on paying your mortgage first. You may be able to pay monthly mortgage payments by cutting out unnecessary purchases and shifting payments around until you get back on your feet.

When all else fails, there are still options

Working out loan modification may not work for you efficiently for making your mortgage payments. In such a case, there are still options available you can make use of;

  • Pre-foreclosure sale – With a lender’s approval you can try to sell your home at its fair market value. You may owe more money on your home than its fair market value. These sales are commonly known as “short-sales.” In some cases, lenders may be willing to forgive the difference between what you owe and what they received from the sale. Some programs also pay an amount toward your relocation costs. When structured properly, a short-sale is a way for your lender to salvage some funds from the sale of your home, as well as remove your obligation.
  • Deed in-lieu of foreclosure – In some circumstances, you may be able to give your home back to the lender. Depending upon your arrangement with your lender, you may be able to reduce most, if not all, of your obligation to them quickly.

You Can Avoid Foreclosure

There are lots of things that can lead to life’s uncertainties and financial hardship such as job loss, divorce, unexpected bills, long-term illness and loss of overtime hours. Your home is placed in a situation or risk of foreclosure when you fall behind or fail to pay your mortgage payments. Be proactive and speak to your lender, explore your options and prioritize your spending. You can avoid and prevent foreclosure by taking control of your financial situation. 

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