Home Mortgage and Finance

We can all be affected by financial hardship from time to time. Unfortunately, when the money stops coming in, the bills still need to go out. If you are one of those people who has fallen behind on your house payments, you may have received (or be about to receive) a foreclosure notice from your lender. There are a number of ways you can avoid foreclosure on your home by simply looking into the following options. These tips have helped many people avoid foreclosure on their homes, and could help you too.

1) Reschedule Your Payments

If you believe your financial difficulties are only a temporary problem, you may be able to avoid foreclosure by negotiating a short term arrangement with your lender to reduce your payments on a temporary basis. Most lenders will allow you to make special payment arrangements if there is sufficient proof that you will be able to repay the amount past due within a short space of time. This type of arrangement is generally referred to as a Special Forbearance, and is probably the easiest way of avoiding foreclosure.

2) Refinance Your Home

If you have owned your home for a number of years, it is probable that you have built up what is referred to as ‘equity’. Equity is the equivalent cash difference between the current appraised market value of your home and the amount still owed to your mortgage lender. Refinancing and cashing out this equity balance is a good way to avoid foreclosure. Often, when using refinancing as a way to avoid foreclosure, you can renegotiate the terms of your loan, end up with lower interest rates, and ultimately reduce your monthly payments.  This might ultimately mean you are paying off your home loan over a longer term, but as well as avoiding the imminent risk of foreclosure, by reducing the monthly amount, you are reducing the risk of receiving future foreclosure notices.

3) Borrow The Amount Owed As An Additional Loan

If you have not built up any equity in your home, another option that may be open to you (providing your credit has not been damaged by late payments) is to get a conventional loan to cover the amount that you owe in arrears. If your credit has been damaged by non payment of your mortgage, you may be able to avoid foreclosure by borrowing the amount you are past due from friends, family or as an advance from your employer. Many are unable to do this, however, so it is vital to takes steps to avoid foreclosure in the first place before it affects your credit.  This is not the best option, as you are at risk of getting into more financial trouble, further increasing the chance of getting behind on your payments again.

4) Pre-Foreclosure Sale

If foreclosure becomes unavoidable and refinancing or borrowing the money you need is not an option available to you, you still may be able to avoid the damage that a foreclosure can do to your credit by selling the home before it is foreclosed on. Unfortunately, this does mean that you will lose your home, and most likely walk away with nothing in your pocket after the sale, however, your credit report will not have a foreclosure notice on it, and you would therefore still be able to purchase another home that is priced within your new budget.

Remember, the only way to truly avoid foreclosure, is to make every effort to fulfill all of your payments on time, every time. If hardship does strike, do not despair.  By choosing whichever of the above options to avoid foreclosure that fit your personal circumstances, you should be more than equipped to save your financial future.