Avoiding a Foreclosure

6 February 2008

Author: admin Posted under Foreclosure Filings, Stop foreclosure

With the foreclosure crisis reaching epic proportions across the country, many homeowners and real estate investors are becoming increasingly worried. Hundreds of thousands of people have already lost their homes to foreclosure, and with 2008 primed to be another big year for defaults and foreclosure filings, it seems as though the worst is yet to come.

However, if you’re faced with a foreclosure, there is help. Unfortunately, more than 50% of the foreclosures that have occurred to date have happened without the lender and homeowner establishing contact even once. Sometimes it can feel like dealing with a default notice will only make the situation more real and painful, but the truth is that by being pro-active and taking steps to remedy the situation, you can in many cases finding a solution that won’t involve a credit-ruining foreclosure. And there are all kinds of public services, hotlines and other helpful services that can help you work out your situation, so that foreclosure is no an inevitable conclusion. Here, we provide some tips to help you stay on top of a default before it gets out of control.

Talk to Your Lender

The biggest mistake that homeowners make when they get behind on their mortgage payments is to ignore the letters from the lender. The absolute best thing you can do is to address the situation immediately, even if you can’t pay. Your lender will be much more likely to want to work with you if you come to them about the problem before they have to track you down. There are all kinds of plans you can work out with lenders, like delayed payment plans, plus you can get an idea of how much time you actually have to find a solution before a foreclosure occurs. This should always be your first step.

Consider Refinancing

One of the major causes of the recent foreclosure boom has been people getting involved in dangerous, sub prime mortgage loans. These mortgages offer low initial costs, but after a first year low rate, they go into periods of adjustment during which your monthly mortgage payment can fluctuate drastically, making it nearly impossible to keep up. One of the best options in this case is to refinance your mortgage. This essentially means you consolidate your debt and take out a new mortgage on your property. Consolidating and refinancing with a long term fixed rate loan will make for a stable monthly payment that can be much more manageable.

Consider Selling

In many cases, selling your property as a pre-foreclosure can be a wise decision. There are often people looking to buy properties in the pre-foreclosure stage, and this will allow you to walk away from the default situation with a little extra money in your pocket. Unfortunately, these days home values are falling so drastically that it can be hard to get back anywhere near what you paid for your home. Still, it is an option worth investigating.

The bottom line is to make sure you take action when faced with a default or the threat of foreclosure. Call your local city hall and ask about foreclosure hotlines and groups that can help. More and more are springing up every day, and providing hope to those in bad situations. Find out more today, and remember that the fate of your default is in your hands.