10 Tips to Avoiding Foreclosure on Your Home
July 10, 2008
Are you having trouble keeping up with your mortgage payments? Have you received a notice from your lender asking you to contact them? If you are having difficulties making your mortgage payments, do not fall into the trap of going into denial and wishing that the problem may just go away. The sooner you take the initiative and reach out to your lender and other legitimate sources for help, the sooner you may be able to get back on track and save your home from foreclosure.
Here are 10 tips to consider if you are facing financial difficulties and are unable to make your monthly mortgage payments:
1. Don’t ignore the problem.
The further behind you become, the harder it will be to reinstate your loan and the more likely that you will lose your house. It is easy to go into a state of denial and begin wishing that the problem may just go away. The truth is, unless you take the first step to finding help things may only get worse.
2. Contact your lender as soon as you realize that you have a problem.
Lenders do not want your house. They have options to help borrowers through difficult financial times. It is always better to contact your lender/mortgage servicer before they first contact you. If you miss a payment and do not take the initiative to call and they should contact you, you will more likely be hearing from their collections department. Although most reputable lenders and mortgage servicers train their collections staff to be courteous to customers, there are others who use aggressive means to collect that might be a turn off to borrowers who are already feeling backed up against a ‘financial wall’.
3. Open and respond to all mail from your lender.
The first notices you receive will offer good information about foreclosure prevention options that can help you weather financial problems. Later mail may include important notice of pending legal action if you are living in a “judicial” foreclosure state or a notice of foreclosure to take place on your county courthouse steps, if you are living in a “nonjudicial” foreclosure state. Your failure to open the mail will not be an excuse in foreclosure court.
4. Know your mortgage rights.
Find your loan documents and read them so you know what your lender may do if you can’t make your payments. Learn about the foreclosure laws and time frames in your state (as every state is different) by contacting the State Government Housing Office.
5. Understand foreclosure prevention options.
Valuable information about foreclosure prevention (also called loss mitigation) options can be found on the internet at portal.hud.gov/portal/page?_pageid=33,717348&_dad=portal&_schema=PORTAL .
6. Contact a HUD-approved housing counselor.
The U.S. Department of Housing and Urban Development (HUD) funds free or very low cost housing counseling nationwide. Housing counselors can help you understand the law and your options, organize your finances and represent you in negotiations with your lender if you need this assistance. Find a HUD-approved housing counselor near you or call (800) 569-4287 or TTY (800) 877-8339.
7. Prioritize your spending.
After healthcare, keeping your house should be your first priority. Review your finances and see where you can cut spending in order to make your mortgage payment. Look for optional expenses-cable TV, memberships, entertainment-that you can eliminate. Delay payments on credit cards and other “unsecured” debt until you have paid your mortgage.
8. Use your assets.
Do you have assets-a second car, jewelry, a whole life insurance policy-that you can sell for cash to help reinstate your loan? Can anyone in your household get an extra job to bring in additional income? Even if these efforts don’t significantly increase your available cash or your income, they demonstrate to your lender that you are willing to make sacrifices to keep your home.
9. Avoid foreclosure prevention companies.
You don’t need to pay fees for foreclosure prevention help-use that money to pay the mortgage instead. Many for-profit companies will contact you promising to negotiate with your lender. While these may be legitimate businesses, they will charge you a hefty fee (often two or three months’ mortgage payments) for information and services your lender or a HUD approved housing counselor will provide free if you contact them.
10. Don’t lose your house to foreclosure recovery scams!
If any firm claims they can stop your foreclosure immediately if you sign a document appointing them to act on your behalf, you may well be signing over the title to your property and becoming a renter in your own home! Never sign a legal document without reading and understanding all the terms and getting professional advice from an attorney, a trusted real estate professional, or a HUD approved housing counselor.
Source: Housing & Urban Development
Comments
Got something to say?
