The RealtyTrac website says that there have been more than 2 million foreclosures this year. California, Texas, and Florida are the top three states when it comes to foreclosures. The Mortgage Bankers Association says that one in every 200 homes will be taken back by the bank.
Put away your credit cards and stop charging if you are facing foreclosure. Set up a plan for how you will spend your money right away. You should tell your lender's litigation or foreclosure department that you are having trouble paying your bills. Keep an eye on your money until you've paid off your other debts so you don't end up in the same situation again. Write down what you and your lender agreed to. Talk to a tax expert if you want to know the rules about foreclosure. Don't give up, there are many things you can do to save your home. Here are six tips that can help you avoid foreclosure:
First, short sale. You can sell your house for less than what you still owe on your loan. You don't have to lose your home to foreclosure or file for bankruptcy, and the process of filing is much faster. The lender saves money because they don't have to start the foreclosure process, but they lose money because they don't get the full price for the house. The price of the house goes down for the buyer.
- Partial Claim. If you qualify, your lender may be able to help you get an interest-free loan from the Housing and Urban Development agency to catch up on your mortgage. To find out more, go to the HUD website or call 800-CALL-FHA.
- Pre-Foreclosure Sale. You can sell your home and use the money to pay off your mortgage loan to keep it from going into foreclosure and hurting your credit score. If you know you can't make the payments, you could sell the house yourself before the date of the foreclosure sale and keep some of your equity. Talk to a real estate agent and a tax expert about the rules for pre-foreclosure sales.
- A special kind of patience. A lender can set up a payment plan based on how much money you have now, or they may temporarily lower or stop your mortgage payments. If your income has recently gone down or your living costs have gone up, you may be eligible for this. You might have to show proof of how much money you have now.
- A "deed in lieu of foreclosure." You might be able to "give" your home back to your lender on your own. This could make it easier for you to get a mortgage loan in the future.
- Changes to the mortgage. For the missed payments, you might be able to refinance the amount you owe and extend the length of your mortgage loan. You might be eligible if you've gotten back on your feet financially and your net income is less than it was before you stopped paying your loan.
Ask the lender if the choice you make will be put on your credit report. If it will, ask that the choice not be put on your credit report. The best thing to do if you are facing foreclosure or any other kind of financial trouble is to contact your lender right away to set up a payment plan or talk about other options. Don't wait for the worst to happen before taking care of the problem. If you are honest about your situation, lenders are more likely to work with you. No matter which option you choose, follow the terms of your agreement and change the way you spend so you don't end up in the same situation again.
(First appeared at Ezine Articles.)
