While foreclosure is the last thing a homeowner wants to face, it is an unfortunate reality of our current economic environment. However, by understanding what leads to foreclosure and the process that ensues, you may be in a better situation to act and avoid problems. The United States Department of Housing and Urban Development (HUD) suggests the following ten tips to homeowners facing foreclosure.
1.) Don't ignore the problem- Avoiding the problem doesn't make it go away. The sooner you act, the easier it is to get help based upon the delinquent fees on your account.
2.) Contact your lender at the earliest indication of a problem- Your lender may be able to provide you with a few options to help manage your house payment Contrary to what you may believe, your lender does not want your home- you lender wants you to be in your home with a reasonable payment plan. However, lenders are required to file a Notice of Default if necessary in order to protect their own interests.
3.) Open all mail sent from your lender- Again, ignoring the problem will not make it go away. In addition, lenders often provide helpful information that may provide a few options during the early phases of delinquent payments. Later in the process, important information regarding legal action and responsibilities may be sent by your lender.
4.) Know your mortgage rights- Read through your loan contract and contact your State Government Housing Office. Be well versed on what your lender may do if you can't make payments and the time frames and laws in your state.
5.) Understand Foreclosure Prevention Options- A number of loss mitigation options are available including, but not limited to: payment forgiveness, extended time to make-up payments, spreading missed payments out over a longer period of time, changing terms of your loan, adding back payments to your loan balance through refinancing, or adding a separate loan through a partial claim.
6.) Contact a non-profit housing counselor- Counselors can help you with the laws and your options as well as organize your finances and represent you in negotiations. These counselors are available nationwide and are funded by HUD.
7.) Prioritize your spending- Next to your health, keeping your house should be your number one priority. Review your spending to see what you can remove to make more room in your budget for your house payment. Focus on optional spending, such as gym memberships, cable television, cellular phones and entertainment. Also, if necessary, delay payment on ungreeneasylife.com secured loans and debts, such as credit cards, until your mortgage payment is made. It is a good idea to contact the lender for your unsecured debt as well, as they may offer some options to help you manage your payments.
8.) Utilize your assets- Review your assets for anything that you may be able to sell for cash to make your payment or reinstate your loan. This can include a second car, jewelry, electronics or a whole life insurance policy. Also, if possible, attempt to take on a second job. What is important in these situations is that you have demonstrated to your lender that you are attempting to reconcile your financial obligations. Even though the financial gain may not be enough to completely reconcile the account, the display of effort is just as important.
9.) Avoid foreclosure prevention companies- With a number of non-profit agencies provided by the government, it is a good idea to avoid using for-profit agencies. You do not need to pay an user to provide you with information or negotiate with your lender when the capacity to do so is available for free. The payments you make to them (typically two to three months worth of your mortgage payment) is more adequately used to pay your loan itself.
10.) Be conscience of foreclosure recovery scams- If a recovery firm claims they can stop foreclosure by acting on your behalf, be careful of what you sign- you may be signing over your home to become a renter. Have the document reviewed by a trusted real estate professional, lawyer or HUD counselor prior to signing the document to ensure you understand all of the terms and conditions in the document.
Most of all don't be embarrassed or ignorant of your foreclosure situation. With a number of options available, it is important to exercise all of them and work with your lender to get through your difficult financial situation.
Ki works, and lives, in Austin, Texas. He maintains a searchable database on his website focusing on escapesomewhere.com Austin real estate. The site provides free search of the escapesomewhere.com/realestate_searchthemls.html Austin MLS
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