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How to Avoid Foreclosure

Foreclosure

With today’s volatile market and with a lot of people losing their jobs, many fall behind on mortgage payments. Therefore, it is realistic to be afraid that you could be in danger of losing your home due to foreclosure. Whatever the reason for your coming into this situation, don’t panic or sit and wait for the lender to take your house; instead try and face the problem and do your best to avoid foreclosure.

You must do everything you can in order to avoid foreclosure and to pay off the mortgage. The first thing to do would be to analyze your finances. Be realistic and do the math so as to know how much you will be able to pay. Then, forget all other expenses and debts, if you have any, and concentrate on paying your mortgage and avoiding foreclosure. Start by saving on your daily expenses and things you don’t really need, like the cafes, movies, going to the gym and similar.

Next, don’t ever avoid talking to the lenders and bankers. However unpleasant and embarrassing this might be, staying in contact with them might actually save you from further troubles. Avoiding their letters and phone calls can just lead you into more serious trouble.

Instead, talk to them and explain your problem, give them information concerning your financial situation, such as your income and expenses. Knowing this, they might be able to make a new repayment plan, or if needed, stop your payments for a while.

Also, talk about your financial situation to a non-profit housing counselor, as he might be able to give you the right advice related to your loan.

You have to try talking to the lender, too, as he surely needs the money and not the house, and the last thing he wants is to take the property back through foreclosure. Of course, the sooner you talk to him, the better chance you have to negotiate a deal with him. He can modify the terms of your loan so that you can afford your payments, and this is the so-called forbearance.

A note modification refers to the lender giving you a smaller rate of interest or freezing it to reduce your monthly payments, or even stopping your payments for a while and then adding some extra months at the end of the term.

You can make a repayment plan by adding an agreed amount of money to your monthly payment until you repay it all. And finally, but this happens quite rarely, there is a debt forgiveness. This means the lender doesn’t ask you to pay back the payments you missed if you continue paying them regularly.

Usually there is some government program for helping people in danger of foreclosure, so get informed and apply if possible.

To raise the money that you need, consider getting an additional job or selling your car, furniture, private collections or any other property that you own. You can also consider selling your house, just make sure you do it properly; contact real estate agents to get your house’s market value and get the best price you can.

If you haven’t reacted in time and the process of foreclosure has already started, try to get a loan, even with a higher rate of interest. In any case, never take loans from the companies you don’t know much about and in no case should you sign anything before consulting a professional. You might come across a scammer and lose everything you have.

To conclude, don’t give up and do everything you can to avoid foreclosure, since it will be bad for your credit rating meaning you won’t be able to buy a new house any time soon, or to qualify for any credit in the future.

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