Ways to Avoid Foreclosure on Your Home
So many homeowners have found themselves either facing foreclosure or being foreclosed upon in the past two years – and perhaps you are worried that you might fall into this growing trend. The economic decline has been particularly rough for those who are already struggling to meet their monthly mortgage payments, and many people who received a subprime mortgage can no longer afford their payments. You have options that can help you avoid foreclosure.
Don’t Ignore Notices
It is extremely important that you keep the lines of communication open between your lender and yourself. Simply ignoring notices about your late payments will not make the problems go away. If you are finding it difficult to make your monthly mortgage payments, contact your lender right away, either by calling them or writing to them. In general, you should contact the loss mitigation department of your lender as soon as possible when you find yourself struggling. Explain the situation to the lender, and let them know why you have fallen behind. Be ready with your financial information, such as your existing monthly expenses and the income that you have coming into the household. The lender will be more willing to work with you if you communicate with them instead of dodging their phone calls and failing to respond to their letters and notices.
Do Not Abandon the Property
Unless you have been told to leave by the sheriff, do not abandon your property. You may not qualify for any type of help if you simply walk away from the home.
Alternatives to Foreclosure
Depending on your individual circumstances, you may qualify for:
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Forbearance. Your lender may work with you to arrange a plan for repayment based on your current financial situation and available income, and may also provide a reduction in the amount of your monthly payment or suspend your payments for a period of time. In general, those homeowners who have experienced a reduction in their income or a big increase in their living expenses may qualify for this type of special forbearance. If the lender agrees to forbearance, you will have to furnish evidence to the lender that you will be able to meet the requirements of the forbearance agreement.
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Modification of mortgage. Refinancing the debt that you owe to the lender or extending the term of your mortgage in order to reduce the amount of your monthly payment is sometimes possible. This is all that is sometimes needed to avoid foreclosure and allow you to catch up on your arrearage and get back on the right track. Homeowners who have had financial problems in the past but can afford the adjusted amount each month may qualify for modification.
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Partial claim to get the account current. If your mortgage payment has not been paid for at least the last four months, you might qualify for payments from a special insurance that is handled though FHA that will bring your mortgage current. At the end of the mortgage, you would be responsible for paying the FHA claim back.
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Making Home Affordable. Under the Economic Recovery Act of 2009, you may qualify for special assistance from the federal government with your mortgage. Contact your lender to see if you qualify.
It is important for those homeowners who are worried that they may be headed toward foreclosure to avoid the many mortgage scams that have popped up in the recent years. Always work with a qualified lender and go by the old rule: if something sounds too good to be true, it is.