12 Tips to Avoid Foreclosure & Save Your Home

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If you are in danger of facing foreclosure because you have defaulted on your monthly mortgage payments, you must act quickly before it’s too late to negotiate a loan modification, and your home gets sold in a foreclosure auction. You may feel hopeless now, but there is still hope until that auction date arrives. Here are a few tips to help save your home from foreclosure.

  1. During foreclosure proceedings, do not move out of your house so that you can still claim benefits such as, one-time FHA mortgage insurance, etc.
  2. Mark your mortgage due date in red and prioritize you’re most important financial obligations accordingly.
  3. Make a list of all your monthly payments. Your monthly mortgage payment must be on top of the list. Credit card bills, personal loans and other unsecured debts will have to suffer and go down the lists for the meantime while you catch up on your mortgage payments. Besides damaging your credit score, these debts will not bring greater consequences compared to loosing your home to foreclosure. The effects foreclosure has on your credit score are MUCH more severe anyway.
  4. Do not ignore nor wait for your banks foreclosure notice. Inform them beforehand that you are in a financial crisis because of a hardship. This act of good-faith could earn a bit of mercy from your lender. Provide necessary supporting loan modification documents for their assessment. In all likelihood, your lender might either extend the grace period or consider a forbearance agreement just as long as you make the effort to catch up with your mortgage payments.
  5. Seek the help of credit counseling and debt management program. You can repair you own credit by downloading our free credit repair kit. Take advantage of lenders and local housing agencies or extension services offering these programs especially if it’s for free. The best venue to seek free financial and foreclosure help from is the U.S. Department of Housing and Urban Development (HUD), as there are lists of credit counseling and debt management agencies approved to work with HUD loans and possibly with your lender. In cases involving promissory notes or predatory lending, contact your bank directly.
  6. Consider the options to get affordable mortgage payments. It could be by restructuring or refinancing your mortgage loan. With the new Obama loan modification programs currently available, deciding what to choose would be easy depending on your financial capacity. Keep in mind that mortgage refinancing costs can be expensive because of the processing fees, such as closing costs and points.
  7. If you’re successful in negotiating a lower monthly mortgage payment, get the resolution in writing. In fact, keep all loan modification documents that legally represent any agreement or arrangement with your lender
  8. If not, sell unnecessary assets. You can raise money by doing this and pay your mortgage until you recover from your financial hardship. It is also a good time to lower your monthly expenses. But doing both of these will not be enough in the long run if your financial situation is remains the same.
  9. You can sell your home to a third party as an alternative. This could be referred to as short sale. Sometimes creditors accept this as full settlement of the debt. Typically though, the selling value of the house cannot cover the outstanding loan balance, so some banks would rob you through foreclosure deficiency if you have too many assets. Get the help of housing counselor, real estate agent or a loan modification lawyer. You may also be able to re-purchase your property after the foreclosure auction.
  10. Negotiate a forbearance agreement. As much as you want to keep your house, is as much as the lenders want to get paid. In the case of forbearance, your lender will temporarily stop foreclosure proceedings until another payment option can be executed.
  11. Declare bankruptcy. This could put your credit record in a bad spot. Remember that you may or may not be able to keep your home with this option. If you seriously think that this is your only way out, call your attorney to discuss what to do.
  12. Turn-over your home to your lender. This is called “deed in lieu of foreclosure.” This option will not affect your credit score but you will be rendered homeless. As you are making things easier for the lender, this act may just be recognized thru eliminating your loan balance even if the house sells less. Again, get the help of a mortgage attorney.

Be realistic in choosing your options because once an agreement is reached you must conform, otherwise you’ll surely face another foreclosure.

The majority of mortgages are secured or funded by government programs such as HUD, FHA, or VA. If your mortgage belongs to any of these agencies, inquire about what options they offer to save your home. But you must approach your lender first to personally negotiate openly and honestly. In doing so you’ll save paying credit counseling agencies or lawyers.

About the Author: Get your Free Do It Yourself Loan Modification Kit. This loan modification kit includes everything to Stop Foreclosure and Save Your Home with a loan modification. Includes Loan Modification Worksheets, Loan Modification Forms, Detailed Step-by Step instructions, lender Rolodex, foreclosure timelines, over 50 bank specific forms And Much More! Absolutely Free!Visit our website for How to articles, mortgage calculators, free sample hardship letters, foreclosure timelines, and dozens of informative articles on loan modifications and foreclosure. Stop by to check out our growing library of free financial kits. We currently have bankruptcy kits, credit repair, mortgage forms, and loan modification with more on their way!FreeDIYkits ”Helping Homeowners Help Themselves”
[ source: articlesbase.com ]

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