Dealing With Foreclosure: Tips and Strategies

​If you are behind on your mortgage payments, or your financial situation is such that you know you are going to fall behind, you may be wondering how to avoid foreclosure. Here are some ways to help you keep your home, and to handle the loss if your property falls into foreclosure.

Go to your lender immediately. Be gracious when speaking to the customer services representative – politeness can go a long way in getting someone to work with you on your loan. Explain your financial situation, and try to work out a deal whereby you can make smaller payments or defer for a short amount of time. Convince them that helping you out is in their best interest.

Next, obtain a second income or some other way to make the payments. Convince yourself that foreclosure is not an option, and that you must come by the money somehow. If you need to take a part-time job, or put the home on the market, consider those options.

During this process, keep in touch with your lender. It will only work with you for a short period of time, but the more you keep in touch and show that you are genuinely working to make the correct payments, the more leniency the lender may give you.

Know that a Notice of Default will show up on your credit as a late payment. A late mortgage payment is a very serious item on a credit report.

If you lose your home to foreclosure, remember that you may reinstate your property (making all payments, including fees) up until five days before the trustees’ sale. If the property goes to the trustees’ sale, the lender may still come after you for any balance not recouped in the sale.

Also know that the IRS will see the foreclosure as a benefit. If you are not required to pay the loan back, they see the remaining balance as income. Remember this when filing your income taxes.

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