Potential loss of your home is the single most urgent problem you may face if you are having financial difficulties. For most, foreclosure means loss of shelter but also loss of many years of investment to create home equity. You will almost always want to treat a foreclosure problem as your highest priority if you are having money problems and you own a home.
Listed here are 12 important tips for preventing foreclosures:
- Budget Evaluation. Are there expenses that can be cut or ways you can increase your income in order to save your home? If you are facing foreclosure you need to make a special effort to eliminate unnecessary expenses. High priority expenses include food, mortgage payments, utilities, essential transportation and unavoidable health-related expenses but these can also be examined.
- Make Payments on Time, If Possible. If you cannot pay all of your bills, you should make mortgage payments first.
- Resolve Amount Due Disputes. Some foreclosures occur because of mistakes made by the mortgage company. If there is a disagreement on the amount you should immediately try to address the problem by contacting the mortgage company. Provide the correct documentation that they request and keep copies for yourself.
- Save Returned Partial Payments. If you cannot make the full payment on your home, banks have the right to refuse partial payments. The money should be set aside and not used to pay other bills.
- Ask the Mortgage Company to Temporary or Permanent Change your mortgage terms. There are many different types of solutions, including repayment agreements and loan modifications.
- Evaluate your Refinancing Options. If you have equity in your home, refinancing may be an option to avoid foreclosure. There are some loan programs, including reverse mortgages for older homeowners, which will reduce or eliminate your monthly payments.
- Selling Your Home Before Foreclosure. It is a good idea to consider listing your home for sale if you are behind in your payments. You will typically get a better price if you sell your home in the opening market instead of on the courthouse steps.
- Keep Track of Foreclosure Deadlines. If there is a court case, you will want to take steps to prevent the foreclosure before the court takes final action. You will always want to prevent foreclosure before a foreclosure sale is held.
- Consider getting Legal Help to Prevent the Foreclosure. Chapter 13 bankruptcy is one of several legal options which may solve a foreclosure problem. If you decide to obtain legal help, do it early so that your lawyer will have enough time to advise you properly.
- Be Realistic About What is Possible. If you are unable to afford your home over the long term your best option may be to sell it.
- Avoid Foreclosure Scams. By law, foreclosure of your home will be advertised to the public. There are many people who offer to help with foreclosure in order to help people out. You should reject any offer to sell your home with an option to buy it back. You should also avoid high-rate loans that are offered as a way out of foreclosure.
- Get Counseling Help. There are nonprofit counselors who may be able to help you avoid foreclosure. If you cannot afford or find a lawyer, nonprofit counseling may be a good alternative. Check into the National Foundation for Credit Counseling.
By: Doug Moore