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Homeowners who have trouble making mortgage payments in a timely manner may be subject to seizure and the loss of title of their home. For these often well-intentioned individuals, unforeseen circumstances such as job insecurity or medical issues have them facing the unfathomable-home foreclosure. Regardless of the circumstances, it should and can often be avoided, with a little effort. If you're unable to make your mortgage payment, it's absolutely critical that you call your lender now, in order to stop foreclosure. Ignoring the bills will only make matters worse, increasing the likelihood that you'll lose your home for sure. Borrowers who seek foreclosure help early are much more likely to work out an answer, no matter how dire their situation. Mortgage companies want to avoid foreclosure as much as you; they're much more interested in the money they make off your interest, rather than the money they'll lose on your home foreclosure. Based on your situation, your lender may be able to provide the foreclosure help that you need. Problems making your mortgage payment? Here are a few options for individuals who can't make their mortgage payments or could have short-term financial problems and want to avoid foreclosure: Forbearance A brief agreement that delays payments for a short period of time. Mortgage lenders will only allow forbearance if you can prove you'll eventually acquire funds. Some common examples would be a tax refund or a bonus where you can show future earnings that can bring your mortgage up-to-date. Reinstatement If you're behind on your mortgage payments, a reinstatement can take place when you make a lump sum payment by a specified date, bringing your account back to current status. Lenders often combine reinstatement with forbearance. Repayment Plan If you're behind on your payments, the mortgage company may give you a fixed amount of time to catch up, by combining a portion of your past due amounts with your regular payments, allowing you to get current. Loan Modification The terms of your loan can be adjusted. Changing the amortization table or lowering your interest rate can make a big difference, reducing your monthly payment amount to something you can afford. Short Sale A deal between the homeowner and lender to sell the property for less than it's worth, with the mortgage lender taking the loss. Pre-foreclosure sale A pre foreclosure sale is an effective way of stopping foreclosure, allowing a default homeowner to satisfy his mortgage obligation by selling the property in question for an amount less than owed. You may qualify if: 1) The loan is at least 2 months delinquent, 2) You are able to sell your house within 3 to 5 months, based on what your lender agrees upon; 3) A new (lender obtained) appraisal meets HUD value requirements. Deed-in-lieu of foreclosure This last resort allows you to "give back" your property to the lender. This will leave a mark on your credit record, but it will stop foreclosure, which is much more severe. Taking a pro-active approach to home foreclosure avoidance can't be stressed enough. If you lose your home to foreclosure, the lender may come after you to recover money owed that may not have been recuperated in the property foreclosure sale. Having a house foreclosure on your credit report is detrimental and ranks right up there with bankruptcy. Do not forget that as negative as things may seem, your current financial problems are probably temporary. Avoid foreclosure now so that when you get back on your feet, you won't be restricted by looming credit issues.
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