Foreclosures can occur when homeowners fall behind on their mortgage payments. However, most lenders do not like to foreclose on property; they would rather collect the loan amount and help you get your payments current. No matter how hopeless your situation seems, there are ways to prevent a foreclosure on your home.
How Foreclosures Happen
The loss of a job or income, unexpected medical problems, and life altering personal situations can lead to late mortgage payments. Unfortunately, these things can also lead to foreclosing.
When you get too far behind or completely default on your mortgage payments, lenders have the option of seizing your home. This seizure is typically the last option for lenders and will be avoided whenever possible. The average lender would rather see you make your mortgage payments than lose your home.
However, it will be up to you, not the lender, to take all of the necessary steps to avoid the situation in the first place.
How to Stop Foreclosures
When it comes to foreclosure, you shouldn't be embarrassed. There are many other people besides you who have found themselves in a similar situation. What is important is that you take steps to prevent it.
Losing your home can seriously damage your credit rating. It may be difficult to buy another house or even rent an apartment after your home has been foreclosed. This is why it is essential that you do everything within your power to regain control.
Here are some basics guidelines that can help you stop a foreclosure before things get too far out of hand:
- Don't ignore the problem. It is very important that you face the possibility of foreclosure head on. Ignoring the situation will not make it go away. In fact, it will probably make things worse.
- Contact your bank or mortgage lender as soon as you know there is a problem. If you can't make a payment, let them know. Your lender may be able to present you with a list of options to temporarily relieve some of your financial burden.
- If your lender contacts you via mail or phone, get back with them immediately. They need to know that you are aware of the problem and are eager to do something about it.
- Be prepared to supply your lender with documentation. If you were unable to make your mortgage payments because of other financial problems, your lender may ask to see some proof such as medical bills, termination notices, or other paperwork.
- Stay in your home. Abandoning your property or signing over your deed to someone else will not negate your loan obligations.
- Be careful with your credit. You may need a good credit score to refinance or take out a home equity loan. Your credit could be your key to getting out of a home seizure situation.
- Contact a HUD-approved housing counseling agency. These agencies will have information on various programs and services that could help you. Best yet, these services are usually free of charge.
Remember, your lender doesn't want to foreclose on your property. By speaking with your lender and doing all of the things shown above, you may be able to turn your situation around.
If your mortgage payments are below 40 percent of your gross income, you should take every step possible to keep your home. If you simply cannot afford the payments, you should try to delay foreclosure long enough to sell the property on your own. When a lender sells the home, they are usually only looking to recoup their loss. By selling the property on your own, you could net enough cash to not only pay off the loan, but also enough to obtain the fresh start you need.