The prospect of foreclosure and losing your home can be daunting, but it is important to know that there are steps you can take to protect your home and your financial future. Foreclosure is the process by which a lender takes possession of a home due to the homeowner's inability to keep up with mortgage payments. Here are some important steps to take if you are facing foreclosure:
1. Contact your lender: The first step in dealing with foreclosure is to contact your lender. You may be able to negotiate a new payment plan or modify your existing mortgage to make it more manageable. If you need time to catchup with finances, a forbearance (temporary stop in making mortgage payments) may be the break to restore financial troubles. If you are having trouble making payments, it is important to communicate with your lender as soon as possible. They may be willing to work with you to avoid foreclosure.
2. Explore government programs: There are several government programs designed to help homeowners who are facing foreclosure. For example, the Home Affordable Modification Program (HAMP) can help you modify your mortgage to make it more affordable. The Federal Housing Administration (FHA) also offers programs to help homeowners avoid foreclosure. HUD-Approved Housing Counseling Agencies are available at little to no cost.
Contact your lender or a housing counselor to learn more about these options.
3. Hire a lawyer: If you are facing foreclosure, it may be beneficial to hire a lawyer who specializes in foreclosure defense. A lawyer can sometimes temporary stop a foreclosure, help you negotiate with your lender, understand your legal rights, and represent you in court if necessary.
4. Contact a Realtor. A Realtor and place your home for sale and facilitate a short sale: A short sale is when you sell your home for less than what you owe on the mortgage. This can be a good option if you are unable to keep up with payments and do not want to go through foreclosure. Talk to and Realtor experienced in short sales, and speak with your lender about the possibility of a short sale.
5. Contact a Real Estate Investor. Some real estate investors specialize in distressed properties such as foreclosure. They understand the process and time table, quick to getting a fair market offer, and buy your house with cash; preserving some of your equity, so it’s not lost to the mortgage lender.
6. File for bankruptcy: Filing for bankruptcy can be a last resort option to delay (not stop) foreclosure. While it may temporarily stop foreclosure proceedings, it is important to note that it can have long-term consequences on your credit and financial future.
7. Seek counseling: If you are struggling with finances in general, it may be helpful to seek counseling. There are non-profit financial counseling services, some at no-cost. Housing counselors can provide you with information on government programs and other resources that can help take control of your finances and avoid foreclosure.
Foreclosure can be a stressful and overwhelming experience, but it is important to know that there are options available to you. By taking proactive steps and asking for help, you can protect your home and your financial future.