Six Tips for Avoiding Foreclosure

The number of foreclosures has reached record high in recent years. As a result of the number of foreclosures, banks and lenders are more willing to work with troubled homeowners to help avoid foreclosures whenever possible. Here are six tips and suggestions to help you stay in your home as long as possible or find other options.

1. Work with your lender. Since banks already have so many foreclosures on their books, they are willing to work with homeowners who are having trouble making their mortgage payments. The key is to call your lender and speak with them every few weeks to keep them updated on your financial situation.

2. File for bankruptcy. This option should only be used as a very last resort. You won't be able to stay in your home indefinitely by choosing this option, but it could stall the foreclosure process by several months.

3. Sell the house. If you have a significant amount of equity built up with your home, you might be able to sell it, pay it off and still have enough left over for a good down payment on a smaller, more affordable home.

4. Do a short sale. Short sales are when the homeowner works with the lender to sell the home for less than what it is worth. Both parties agree on a certain amount and the rest of the money owed on the home is forgiven. This is a common strategy for thousands of troubled homeowners who do not want a foreclosure on their credit report.

5. Never sign your home over to a third party. There are scams out there in which a third party agrees to take over payments while you stay in the home. But the third party never makes the payments on the home and the lender forecloses on it anyways.

6. Don't take a high interest second mortgage. Many people take the money from the equity they have built up and spend it rather than applying it to their owed balance. Then the lender takes the property and leaves the owner without a home.

Blog News