Foreclosure

Often the mortgage payment is one of the largest monthly payments that we owe.  However, it is also one of the payments that can be very detrimental to miss because the mortgage lender can foreclose on your property. 

When a mortgage lender forecloses on your property, they basically take your house from you since you are no longer able to make the payments. 

While this might sound horrible, there are ways to avoid having this happen to you.  Here are seven tips for avoiding a foreclosure on your home.

Talk to your lender. If you are currently in financial trouble and have either already missed a mortgage payment or know that you are about to miss a payment, one of the first things you should do is talk to your lender about the problem. 

They can often help you determine what the best solution is for both parties – they want their money and you want to keep your home.  Remember, the mortgage lender does not have to do you any favors, but often will help you out for a few months in order to keep you as a customer.  They would rather receive your money instead of being forced to own your home.

1. Analyze your financial situation.  One of the first steps to avoiding a foreclosure is to analyze your financial situation and know that potential problems may be coming.  Then, you will have time to deal with the issue (possibly by cutting expenses or getting a second job) instead of waiting until it is too late.
   
   
   
2. Try to sell your house.  If you are not able to make the payments and have no foreseeable way to start paying back the money, then it is a good idea to sell the house and be rid of this debt.  While some mortgage lenders will work with you for a couple months if you are having a difficult time, many will not work with you for much longer than that.
   
   
3. Contact a non-profit credit counseling agency.  These agencies can help you sort through your financial affairs and help you make the best decisions to avoid foreclosure on your home.
   
   
4. Contact your local government for assistance.  Depending on why you can’t make your payments, there may be an assistance program available to help you out.  For example, if you have recently lost your job, there might be a program available to provide financial or counseling assistance to help you out.
   
   
5. If the reason that you cannot pay your mortgage is that you have an adjustable rate mortgage with an interest rate that has just significantly increased, contact your lender and ask if they can freeze the interest rate at the lower rate for a period of time.
   
   
6. Work with your lender to develop a repayment plan.  For example, if your normal monthly mortgage payment is $1500, perhaps your lender would allow you to repay one missed payment over the course of the next 10 months at an extra $150 per month.  This will save you from having to come up with a large sum of money all at once.