The Best Way to Avoid Foreclosure

Most homeowners never dream of the possibility that they will be faced with foreclosure. But there are times, sometimes due to unforeseen circumstances, when homeowners simply cannot meet their mortgage obligation. There are resources available that will help, but it is up to you to act quickly and do so before any legal action is taken.

Step 1

Call your lender and explain your hardship circumstances. Ask what you can do to prevent it from filing a Notice of Default. Your lender is much more likely to work with you prior to filing foreclosure proceedings.

Step 2

Inquire about a possible forbearance. In this situation, the lender holds off on taking any legal action and constructs a payment plan that you find manageable.

Step 3

Speak to your lender about a possible repayment plan. In this situation, the lender might spread out any payments that you have not made over a more extended period of time. It might do this by taking a percentage of your delinquent payments and adding it to each upcoming payment. This will increase your monthly house note.

Step 4

Consider refinancing. This option depends on the equity you have in your home. If you do have enough equity, the lender might boost the amount of your loan, adding in past-due payments, and then would re-amortize the loan.

Step 5

Determine if you qualify for any government programs that help homeowners facing foreclosure. These programs often make a completely new loan for you and you would be able to start paying again from scratch.

Tips and Warnings

  • Act quickly.

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