There are several steps available to help you avoid a foreclosure. They all start with one thing: action. If you have received a notice of default or are behind in your mortgage payments, this article will tell you how to avoid foreclosure on your home. To avoid foreclosure, you may first attempt to negotiate one of the following options with your lender:

Loan restructuring or modification

There are companies that specialize in loss mitigation that can help you negotiate with your lender to get your mortgage in good standing again. There techniques available to get a modification approved, such as a separate payment plan for your delinquencies, or adding your delinquent amount to the end of your loan. You may qualify for a loan restructuring plan, particularly if you have recently had a reduction in your income or increase in living expenses. Sometimes it is even possible to get your monthly payment lowered.

Short sale

Realtors who specialize in short sales can assist you in selling your home before it gets to the foreclosure phase. Here, the short sale agent negotiates with your lender to sell your home at a price less than what you owe. The lender would take less than you owe on the loan and they would avoid a costly foreclosure process. If a short sale doesn’t work out, you may be able to give the property back to the lender (before foreclosure) and walk away without owing anything. This process is not as damaging to your credit report as a foreclosure would be.

There are steps you can take to avoid foreclosure that can be done on your own, without the assistance of a short sale real estate agent:

• Reinstatement – Reinstatement of your loan by paying your lender all the past due amounts to bring the mortgage current. This option may not be feasible if your financial stress that caused the deliquency hasn’t improved.
• Mortgage Refinance – Refinance your total debt load, or extend the term of the loan to reduce your payments. However, this is not very feasible if you owe more on your property than it’s worth. If you have received a Notice of Default already, then you probably are not able to do a loan restructuring plan or refinance. Considering bankruptcy should only be a last resort.
• Bankruptcy – You may qualify for Chapter 7 Debt Elimination or Chapter 13 Reorganization. A bankruptcy stays on your credit report for 10 years.
• Foreclosure – This is the most damaging to your credit other than bankruptcy. The mortgage company will take your home and equity. This will stay on your credit report for a total of seven years.

In these difficult financial times, many homeowners are able to benefit from the services of experienced real estate agents who specialize in foreclosure avoidance. They routinely negotiate these options, thereby helping their clients avoid the long term consequences of a foreclosure.

Tips to avoid foreclosure

Don’t ignore the problem

The further behind you become, the harder it will be to reinstate your loan and the more likely you will lose your home. Contact your loan company as soon as you realize you will have trouble making your payment. Lenders prefer to be in the lending business, not the real estate business, so they do not want your house. They all have options available to help you through tough financial periods.

Open all mail from your loan company and respond to it.

The first notices you get from your lender may offer good information about preventing foreclosure that can help you navigate your difficult financial problems. Later, mail from your lender may include important notices of upcoming legal action – you need to read these. Your failure to open the mail will not be an excuse in foreclosure proceedings.

Know your rights

Find your loan documents and read them so you know what your lender may do if you can't make your payments. Learn about the foreclosure laws and time frames in the state you live in.

Budget your spending

Besides your health care, holding on to your home should be a top priority. Review your bills and expenses to look for areas you can cut spending so you can make your mortgage payment. Look for optional expenses – cable TV, memberships and entertainment that you can eliminate.

Contact a real estate company that specializes in loss mitigation

If you are unable to make you mortgage payment and are in jeopardy of losing your home, contact a reputable loss mitigation company to help you by negotiating with your lender to resolve your situation.

Documents you will need

These documents will generally be requested in order to process your loan modification package:

• Hardship Letter – A letter from you to your lender explaining why you are having trouble making your payments.
• Financial Statement – This shows where your money goes and how much is left over after paying your bills. An experienced short sale agent can provide the appropriate forms to itemize your finances and show hardship.
• Bank Statements – Last two months of bank statements – checking, savings, etc.
• Mortgage Statements – For all loans associated with the property, you need to collect the most recent mortgage statement & account number.
• Pay stubs – Last two months of pay stubs, or proof of unemployment.
• Tax Returns – Last two years of tax returns including W2′s.

Once all of these documents are gathered, you can begin negotiation wtih your lender.

Where to go from here

• Find out if you qualify to do a short sale.
• Get a referral from a short sale specialist Vacaville real estate agent to a professional near you.

Similar Posts:

• Short Sale Cash Flow System.
• What’s the Difference between Bankruptcy and Foreclosure?
• Free Helpful Guide About Foreclosure Or Bankruptcy
• Things to Know Before Buying Foreclosure Properties
• Free Useful Facts About Using Your Home AS Collateral For Debt Colsolidation Loans

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