How to Avoid a Foreclosure

There are several ways for homeowners to avoid foreclosure, even in times of financial difficulty. The term foreclosure refers to the legal process by which a lender seizes a property from a borrower when the debt is not paid. Foreclosures mean the loss of your property and the destruction of your credit.

Recognize the Problem

The first step is to admit that there is a problem. Ignoring it will not make it go away, and the longer you wait to start rectifying the situation, the further behind you will fall on payments. This will make it even more difficult to avoid foreclosure.

Talk to your Lender

Contact your lender as soon as you realize that you are falling behind on your mortgage payments. They may be able to assist you in avoiding the foreclosure of your home. Lenders prefer not to foreclose on a property if it can be avoided, and have options in place to help borrowers through times of financial difficulty.

Check Your Mail

Open and respond to any correspondence from your lender. At first, you will likely receive information about foreclosure prevention. Later in the process, you may receive legal notices. Neglecting to open or respond to those notices won’t help avoid foreclosure and will likely hinder your chances of keeping your home.

Know your Rights

Read your loan agreement so that you will know what to expect in the event that you are not able to make your mortgage payments. Research foreclosure laws applicable to your particular state, as well. Every state has its own legislation regarding the foreclosure process, and laws may vary greatly from one state to another.

Contact HUD

The U.S. Department of Housing and Urban Development (HUD) offers low-cost or free counseling services nationwide. A housing counselor may be able to assist you in understanding the law in your state, and explain your options to avoid foreclosure to you. Financial organization and representation during negotiations with your lender are other services provided by a housing counselor if needed.

Spend Wisely

Apart from healthcare, housing should be your number one priority. There are often unnecessary expenses which can be cut in order to afford mortgage payments. Some of these are cable or satellite television, gym memberships, club memberships, entertainment, and dining out. Paying unsecured debts, such as credit cards, should be postponed in favor of making your mortgage payment.

Utilize Available Assets

To help avoid foreclosure any assets such as a second car, boat, jewelry, or anything else of value should be sold for extra money to put towards payments. If possible, all household members of working age should get an extra job to earn additional money for payments. If these efforts are insufficient to get your payments made, you will at least have demonstrated to your lender that you are willing to sacrifice for the sake of keeping your home.

Avoid Foreclosure Assistance Companies

There are several companies who offer paid services in foreclosure assistance. They may offer to negotiate with lenders for a fee. Those same services with help to avoid foreclosure are also available for free or very little cost through your lender or HUD, instead.

Avoid Scams

Any organization claiming that it can stop the foreclosure process immediately is perpetrating a scam. All legal documents should be read and understood thoroughly before being signed. When it comes to trying to avoid foreclosure, do not sign anything without the advice of an attorney, HUD-approved counselor or other real estate professional.