If foreclosure is looming over you like a black cloud on a sunny day, don’t ignore the rain. Open the letters your lender is sending you and see where you are at in the process. Make sure you find your mortgage documents and read them thoroughly to know what to expect when you don’t make your payments. If they have just begun to issue notices of non-payment, they haven’t issued the foreclosure yet. But if you ignore the pending legal action letters, that is no excuse in court. You may still have time to handle this situation and avoid a foreclosure on your credit report.
Work With The Government
Be sure that you know your state’s laws and the time frame you are dealing with when it comes to foreclosure. When you learn the time frame and all the steps of foreclosure and compare them with the letters or other notices from your lender, this will insure you of the time you have to move or to secure your exit strategy. The Federal Government’s Housing of Urban Development department has number of programs that can help you learn how to get away from your situation. A lot of these programs depend on the difference between the house’s value and how much of the loan is left. HUD also has a several of counseling options to help you understand the financial situation you’re in and to decide on the option that will work best for you.
Another good way to avoid foreclosure is to take a long and realistic look at your finances. Make a plan for your budget so you can fit in your basic needs, such as food, gas, bills and mortgage. Skip wasting money on anything that isn’t necessary, including even credit cards or cable packages. Pick a cheaper phone plan and stop eating outside. If you need some extra money, consider finding a second job or doing some freelance tasks that will bring you an extra earnings. If you need money more urgently, check out your home furnishings and sell some more expensive and higher quality items for some cash. Of course, this is good only for a one-time earnings and you should still have plans on how to make your mortgage payments regularly during next few months.
Rent It Out
A creative way to avoid foreclosure is to rent out your house to someone else. Their rent payment now becomes your mortgage and insurance payment. That means you would have to find somewhere else to live that is more affordable and move out. You could also rearrange your house to allow for a roommate to share your house and, depending on the amount of your mortgage payment, they might be able to pay a large portion of it to make it more affordable for you and fit better in your budget. On the other hand, renting out your home may lead to additional headaches from your renters and potential damage to your home.
The most simple way to avoid foreclosure is to nip it in the bud with a short sale. There are lots of investors waiting for short sales to come on the market. This is where the bank will negotiate a sale price with a buyer and sells your house short of what is owed on it. Trust us, the bank does not want to own your house. They will usually take an offer that is close to the loan principal, even if the home is worth more than what is left. This makes for a great investment opportunity for buyers with cash on hand.