foreclosure3Interest in foreclosure prevention is at an all-time high. That’s because the rate of foreclosures in the United States is higher than it’s been in decades. The easy credit of five years ago led hundreds of thousands of people to get into home loans they really couldn’t afford. These were adjustable rate loans, and when the rates went up, many of those borrowers found they could no longer make payments. Faced with foreclosure, many of them are now desperately trying to find ways to keep their homes. You may be one of them.

Foreclosure Prevention is Possible

The good news is that foreclosure prevention is possible, if you start right away. The most important thing to do is respond to those letters and phone calls you’re getting from your mortgage company. Too many people ignore the late notices, hoping the problem will go away. It doesn’t happen. The longer you let things go without taking action, the less likely it is that your mortgage company will work with you to come up with a plan to save your home.

When faced with losing your house, there are several things you can do. The most desirable option is to refinance your mortgage at a lower rate with more affordable payments. If your credit has been damaged, however, you may not be able to do this. You could try to work out a payment plan with your mortgage company to take care of the late payments. Usually this means you pay a little extra on each month’s payment until the arrears are paid off. If you’re already having trouble paying your mortgage, however, this probably won’t work for you, either.

What About Selling the House?

Selling the house might be a good idea, if you can find a buyer, and if you can get a price that covers what you owe on your loan. In this real estate market, that might be a tricky proposition, but not impossible, especially if you already have a lot of equity in your home and can sell it for less than it’s worth. You can also try a short sale, where the bank agrees to let you pay off the loan for less than what you owe on it.

Finally, you can see if your loan company will do a deed in lieu of foreclosure with you. In this situation, you basically do a voluntary repossession of the home, and give the keys and deed back to the bank.  Your credit will take a hit, but not as much of a hit as it would if you let the house be foreclosed upon.

As you can see, there are several ways to accomplish foreclosure prevention. Of course, this is just a basic overview, and there are many more details to using any of these methods, but this outline should give you a good idea of the options available to you when you’re faced with every homeowner’s worst nightmare. You don’t have to just sit back and let the bank take your home. You can do something about it.

This is the first installment in our foreclosure series. Be sure to check back for updates…

Filed under: Foreclosure

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