Avoiding a Home Foreclosure

Avoiding a Home Foreclosure

If you've missed mortgage payments, it doesn't necessarily have to mean a foreclosure is imminent. Work with your lender to determine if there's a course of action you can take that will let you keep your home.

It's a sad but true testimony to today's economy: more homeowners than ever before are facing foreclosure on their homes. Can anything be done? Can it be stopped? Each situation is different, but there are some things you can try.

Work with Your Lender
If you know you probably won't be able to make your mortgage payments, you should contact your lender, and do it immediately - before they file a Notice of Default. And definitely do not ignore correspondence from your mortgage company - that will only make things worse. Depending on your situation, there are some options your lender may to able to suggest to you:

• Forbearance: Your lender might agree to wait before taking any legal action to give you a chance to work out a more affordable repayment plan.
• Repayment Plan: This would spread your delinquent payments out over a period of time. Basically you would add extra money to each regular mortgage payment until the missed payments are caught up.
• Note Modification: If your mortgage has an adjustable interest rate, your lender may agree to lock in an interest rate before it increases again or simply change your interest rate to something more manageable.
• Refinance: If you have a good deal of equity in your home and meet the lender's lending guidelines, it might be possible to increase your loan balance to include the missed payments, which would be paid at the end of the loan term.

Other Steps
If your lender has already filed a Notice of Default, you have very few options left. If there is no way you can make up the missed payments and/or your lender won't work with you, there are a few other things you can try to stop a foreclosure:

• Sell Your Home. Meet with a reputable real estate agent and get your home on the market.

• Deed Your Home Back to the Lender. This basically gives your home back to the lender, your mortgage obligation is forgiven and the foreclosure action is canceled. However, this may affect your credit the same way a foreclosure would, and you're still out of a home.

Facing foreclosure is a difficult time and lots of difficult decisions have to be made. But before throwing in the towel, talk with your lender to see if there are any other options you can explore.