How to Prevent Foreclosure?
Potentially losing your home is just one of the difficulties you could face if you are having financial trouble. In most cases, foreclosure not only means not having a place to live, but it also means the loss of the many years of equity you've built up. If you're having money troubles and you are a homeowner, follow these tips to try to head off a pending foreclosure.
- Evaluate your budget, looking for expenses that can be trimmed or ways you can augment your income. If you're facing foreclosure, you should cut out all unnecessary expenses. Even your essential expenses, such as groceries, mortgage payments, utility bills, transportation costs, and medical expenses can be reduced, if you know where to look.
- Make your payments on time, if at all possible. If you are to the point where you cannot afford to pay all your bills, pay your mortgage first.
- Some foreclosures happen due to errors made by the mortgage company. If there's a dispute on the amount you owe, address the problem immediately by calling the mortgage company. Be prepared to show proof of the amount you actually owe, and don't forget to make copies for your own records.
- If you can't make the full payment on your home, the bank reserves the right to deny a partial payment. If a partial payment is returned, set the money aside and don't use it to make other bill payments.
- Ask your mortgage company to either temporarily or permanently change the terms of your mortgage, with a repayment agreement or a loan modification.
- Look at your options for streamline refinancing. If you've built up equity in your home, you may be able to avoid foreclosure by refinancing. There are some programs, such as a reverse mortgage, which can reduce or even eliminate your monthly payment.
- It may be a good idea to put your home on the market if you're behind on your mortgage payments. You will most likely get a better price if you sell your home on the open market rather than at a foreclosure sale.
- Keep up with foreclosure deadlines. If there's a court case pending, you should take the necessary steps to prevent the foreclosure before final action is taken (such as a foreclosure sale).
- Think about getting legal aid to prevent foreclosure. There are several legal options available to homeowners in debt, such as Chapter 13 bankruptcy. If you decide to go the legal route, do it early enough so that your attorney has adequate time to advise you.
- Be realistic. If you won't be able to afford the payments on your home over the long term, it may be best to sell it.
- Look out for foreclosure scams. Foreclosures are advertised to the public, by law. There are unscrupulous individuals that offer to help with foreclosures; say "No thanks" to any offer to sell your home with the option to repurchase it. You should also stay away from high-interest loans offered as a method to stop foreclosure.
- Get counseling- there are nonprofit agencies that might be able to help you prevent foreclosure. If you can't find a lawyer or cannot afford one, this counseling may be a good second choice.