Is your home on the verge of foreclosure? Don’t give up yet. There are steps you can take to help you avoid foreclosure. As scary as it may seem, just because you’re afraid you may be headed in that direction doesn’t mean you’re doomed. In fact, there are actually a number of solutions you can look into. And even if you’re not in danger, it’s still good to take a few steps to prevent that possibility if something goes wrong down the line. Read on to find some helpful advice on what you can do to avoid foreclosure
Please note this is a sponsored post, but it in no way impacts my opinion and reviews of anything mentioned below.
1. Prioritize Your Monthly Mortgage Payments
To start, the most obvious way of avoiding foreclosure is to make your payments on time and in full. Of course, it’s understandable that sometimes this is easier said than done. Especially since you have other important expenses to keep up with as well.
One way to make sure you don’t fall behind is to build up an emergency fund. That way, if there are times when money is tight, you can have other funds to dip into to make vital payments, like your mortgage. If you don’t have the extra income to build an emergency account, consider taking on a short-term second job or side hustle to earn more.
You can also analyze your current monthly spending habits. While some expenses are absolute necessities, there are areas where you may be able to cut back. For instance, you could cut down on ordering takeout, make coffee at home instead of paying for Starbucks, cancel cable TV and/or certain streaming services, or generally hold off on frivolous spending for a bit. Even the smallest change can add up.
Another thing that can help is to have assets on hand to sell for cash if needed. However, you should consult with an expert before making this decision. Again, you don’t want to sell something that is essential to you and your family’s everyday life.
2. Be in Touch With Your Lender
Be aware of your lender’s attempts to contact you. This means actually opening and reading the snail mail and emails they send you. If any of these mailings require you to respond, be sure to do so as soon as possible.
Ignoring these mailings is even riskier if you are anticipating bad news financially. You could miss very important notices that need to be resolved in a timely manner. In some cases, the notices are sent to make you aware of potential legal actions.
Don’t be scared to contact your lender when you’re worried about the possibility of foreclosure. In fact, reaching out to them as soon as you notice a problem can help mitigate the issue. Keep in mind that a lender wants you to keep making mortgage payments—which foreclosure would stop.
You can also contact your lender about a mortgage repayment plan or forbearance. If you’ve recently been dealing with a financial setback, a home foreclosure would only make it worse. Depending on the circumstances, you may be able to discuss a more flexible mortgage repayment plan with your lender. Be prepared to assure them that this setback is only for the short term.
Forbearance means that your lender would temporarily freeze your mortgage payments in the case of financial trouble. You’ll have to discuss this with and get approval from your lender. In order to get approval, you will also have to supply certain documents and financial records.
Again, if you’re having trouble with finances and are unsure whether you can continue to pay your mortgage as is, it is absolutely necessary to contact your lender as soon as possible. Don’t wait until the problem escalates.
3. Avoid Foreclosure by Refinancing Your Home Loan for Lower Monthly Payments
When you choose a home loan refinance, you are essentially able to open a new, different loan. This new loan is used to pay off your original loan, and all future monthly payments go toward the new loan. Refinancing can grant you a more flexible loan term, a change to the timeline, lower interest rates, and lower monthly payments. This can make keeping up with mortgage payments more manageable.
Of course, refinancing isn’t the right choice for everyone. As with any major loan, there are both pros and cons to consider. Speak with your lender to discuss if refinancing would be the right move.
4. Consider Signing a Deed-in-Lieu of Foreclosure
While this is a way to avoid foreclosure, it also means releasing ownership of your home. If you choose to sign a deed-in-lieu of foreclosure, you are no longer responsible for mortgage payments. But that’s because you have signed over ownership of the house to your lender.
As with any important document, make sure you completely understand the deed-in-lieu of foreclosure before signing. Consult with an attorney about this option before making a final decision.
It’s usually good to have an attorney on hand with a situation as delicate as a foreclosure. If a company offers something that seems too good to be true, seeking legal advice could help you to avoid a foreclosure recovery scam.
5. Short Sale
Like a deed-in-lieu of foreclosure, a short sale also means having to leave your home. So, while it may be a last resort option, it’s still good to be aware of and keep in mind. If you do choose a short sale, you will have to get your lender’s approval before pursuing it any further.
With a short sale, you sell your house for less than you owe the lender. Hence, why it’s called a “short” sale. However, this option usually means that, after accepting the amount you receive, a lender will forgive the remaining balance.
Now that you know your options and the steps you can take, you can take a deep breath and form a plan that best suits your wants and needs. Does refinancing to avoid foreclosure sound like the right move for you? Then start looking for the best mortgage refinance loans available in your area. You’ve got this!
