How to Avoid Foreclosure

Foreclosure is rarely something a homebuyer expects to encounter (excluding those who knowingly buy a home never intending to make payments), but when you’re unable to pay your mortgage, foreclosure becomes a very real, very scary possibility. Avoiding foreclosure is essential to not only keeping your credit rating half-way decent, but also to keep your home.

The Notice of Default

When a mortgage company feels you’ve missed too many payments, it will file a Notice of Default. Once this notice is filed, the foreclosure proceedings have begun. If possible, you should do all you can to avoid having the Notice of Default filed in the first place. When you see things starting to unravel in your financial world due to any number of circumstances, you should take action immediately. Consult with a real estate lawyer to give you all of your options, but at the very minimum, talk to your mortgage company rather than ignoring letters and calls from the company.

In many cases, if you’re proactive and know your options, you can find a working solution with your mortgage company. The company would rather keep your payments coming in, even if they are a bit different than originally planned, to continue making money from your loan. To this end, the bank will likely work with you to refinance your home if possible, adjust the interest rate on the loan to lower your payments, revise the payment terms, such as allowing you to pay less now and more later to balance the hard times, or even forgive a missed payment if you can start making payments again now. The only way you’ll know what your options are is to seek the help of your mortgage holder and possibly the assistance of a real estate lawyer who can show you other possibilities.

When You’re In Foreclosure

Once you’re in foreclosure, you absolutely should consult with a lawyer or a real estate law firm to find the best solution from your available options. You can stop foreclosure on your home by selling it through traditional methods, through a short sale, which will need to be agreed upon by the lender, or by signing the house over to the mortgage company in a deed-in-lieu of foreclosure agreement.

The best option is to sell your home and use the profits to clear the account, but if that is not possible, a short sale, which is a way to sell a house worth less than what you owe, might be an option. It would hurt your credit, but not as much as a foreclosure or deed-in-lieu agreement.

Easy Step By Step

• Contact your mortgage company when you’re not able to make timely payments
• Try to negotiate a resolution that gets you back on track before a Notice of Default is filed.
• Find the funds to reinstate your loan if possible
• Sell your home to settle the debt

Warnings, Advice, and Suggestions

Foreclosure and financial troubles can be emotionally staggering. Don’t let negative emotions such as embarrassment or fear get in the way of a solution. Be proactive and work hard to find a solution with your mortgage company. In most situations, they would like to work with you to keep your family in your home.

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