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Preventing Foreclosures

Let's learn how to stop foreclosure and keep your home or investment property. There's no need to panic just yet. There are things you can do to prevent a foreclosure and keep your home or property.

Nowadays, there are lots of property owners with risky adjustable mortgages who cannot make their loan payments. If you’re in a similar dilemma, there’s no need to worry quite yet. Simply go to your lender, or bank, to discuss your situation and available options. The last thing you want to do is foreclose on your home or property.

Your lender doesn’t want to foreclose and would rather work something out with you, such as giving you a forbearance or grace period. The important thing to remember is that they will work with you to find a solution, so don’t think the situation is hopeless.

However, it’s important to do this early on and not near the foreclosure stage - don't miss a bunch of payments and then go to your lender saying you need help or a bit of time to get your finances in order. Try to reach out to them early on and see if they will work with you.

You want to have as many options as possible, so the longer you wait, the slimmer your chances will be. But in all honesty, the best solution to foreclosure is to avoid it. There are several steps you can take to minimize the chances of a foreclosure knocking on your door.

  • Budget Cut – Evaluate your budgeting and determine if there are expenses you can eliminate in order to increase your income. High priority expenses include food, utilities, mortgage payments, essential transportation, and necessary health expenses. But again, these can be reevaluated to see where money can be spared.
  • Timely Payments – Try to make your mortgage payment first, before your other bills. Remember, prioritize.
  • Partial Payments – If you can’t afford full payment and the bank refuses partial payment (they have a right to do so), then put these payments aside and aim for a full payment in the future.
  • Refinancing – If you have equity, this might be your only option. You will be able to reduce your monthly payments.
  • Loan Modifications – Ask the lender if they are willing to re-modify your loan agreement. After all, your property is on the line.
  • Legal Help – Chapter 13 bankruptcy might be able to solve a foreclosure. Make sure to do this early so that your lawyer will be able to guide you properly.
  • Counseling – There are several nonprofit counselors who can help you, especially if you cannot afford a lawyer. Check the National Foundation for Credit Counseling.
  • Foreclosure Deadlines – If a court case has been scheduled, you need to take steps before the court finally takes action. Needless to say, you need to prevent foreclosure before the sale is held.
  • Sell – Sometimes, you just have to be realistic and bite the bullet. Although you will have to sell the property, at least you won’t be losing it due to foreclosure. Plan in advance, though, and have a property set aside in which you can live.

SCAM ALERT: Foreclosures are required by law to be advertised to the public. But there are people who will offer to sell your home with the option of buying it back. Also, there are high-rate loans that are intended to ease you out of foreclosure. Avoid fishy situations such as these.

A great resouce for information on avoiding or preventing foreclosrues:  US Department of Housing & Urban Development

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