10 Tips to Help You Avoid Foreclosure
If you’re behind on your mortgage payments and the bank is threatening to foreclose, you don’t have to panic. Yes, this is a nerve-wracking time for you, but you do have rights, and just because the foreclosure process has begun doesn’t mean that all is lost. In many cases, there is still a lot you can do to put the brakes on the foreclosure process, and it all starts with making sure you stay alert.
If you are only a few months’ behind on your mortgage payments, you can simply call the bank and consult with them on how you might be able to pay them what you owe them so that you don’t lose your house. Foreclosure prevention is sometimes as easy as just paying the bank what you owe them and nothing else.
Remember, the bank would rather have your money than your house, so they are willing to work with you in most cases. Many homeowners do ask about selling a house in foreclosure, and in most cases, this is acceptable to the bank. In fact, in most instances you can sell your home right up until auction day, so you should never give up on ways to keep your home.
If you’re curious about other tips to avoid foreclosure, below are 10 of them.
1. Know What Your Rights Are
Just because you’re involved in a foreclosure doesn’t mean the other side has all of the rights. Legally, you have rights as well, so it’s good to know what those rights are before you go any further. You can start by taking out a copy of your loan documents and reading them thoroughly because they will go into detail about what the bank can and cannot do if you’re late with your payments.
You can also check with your state’s housing office because each state is different when it comes to foreclosure laws. Checking with them is a great way to learn what you should and shouldn’t do when being foreclosed on.
2. Contact Your Lender as Soon as Possible
As soon as you know there’s a problem, you should contact your lender so they don’t think you’re ignoring the problem. After all, most banks are willing to work with you, and calling them shows them that you care about the problem and you’re willing to do what it takes to rectify the situation.
3. Take Advantage of Government Resources
Each state plus the federal government provides resources to help you figure out what to do when you’re behind on your payments. Remember, you don’t have to do this alone, and ways to prevent foreclosure — also called loss mitigation — are often found on governmental websites. In fact, you can get started by visiting the FHA website at www.fha.gov/foreclosure/index.cfm.
4. Use Your Other Assets to Pay the Mortgage
When a bank is threatening you with foreclosure, this is a good time to take a look at your savings account and other assets to determine if you can find a way to get the money to pay off what you owe the bank. This might end up being easier than you think, and if you’re considering selling to avoid foreclosure, that may well be an option, too. However, always check with the lending company first to make sure that is acceptable to them.
5. Try Not to Let it Go on Too Long
Missing one payment is something most people do once in a while, but you’ll want to try not to miss too many payments. Once you miss a payment, try to work hard not to let it happen a second time. Just try your best not to let missed payments become a regular part of your life because things can spin out of control quickly, and the more months you miss, the more difficult it will be to pay back the money.
6. Don’t Ignore Any Contacts From Your Lender
Most lenders send out letters via snail mail when you’re being foreclosed on, and these are not letters you want to throw away. Indeed, each letter has very important and timely information about your missed payments, so whatever you do, do not ignore this correspondence.
Included are usually suggestions for what you should do next, as well as answers to questions such as, can I sell my house during the redemption period? A redemption period can be anywhere from one month to two years, depending on the lender, and you can sell your home at any point during this time to pay back what you owe the bank.
7. Work with an Expert to Explore All of Your Options
There are HUD-approved housing counselors to help you figure out which option is best for you, so you never have to pay money to companies that promise to help you avoid foreclosure, especially since many of them are scams. If you want to find information on short selling a house vs. foreclosure, they can provide you with the details you need to make the right decision.
A short sale is when a bank allows you to sell your home for a price that is below what you actually owe on the loan. There are pros and cons to this, but it is worth exploring if you’re already behind on your mortgage payments.
8. Be Aware of Foreclosure Prevention Scams
Once your foreclosure is public information, you’ll likely get contacted by scam artists who want to make you think they can prevent your foreclosure from happening — for a fee, of course. Be aware of these companies because most of them are not legitimate. If you’re considering using one, go to the Better Business Bureau’s website and check them out; this may save you a lot of headaches in the future.
9. Start Working on Your Finances Immediately
Once you learn you’re being foreclosed on, this is a good time to start working to improve your finances. Start keeping a budget and eliminating expenses that are frivolous. If you have expenses you can do without — think entertainment expenses or memberships — do so to have more money in the bank each month.
Once you become more aware of what you’re spending your money on, it may help you get back on track with your finances so you can start paying your mortgage again.
10. Never Make a Final Decision Until You Have All of the Facts
Don’t go by what you read on the Internet. Instead, find out the facts before you make your next move. Can you sell a house in foreclosure? Yes, usually right up until auction day. Do foreclosures sell for less? They often do, but the bank is always going to try and get the highest price they can for the house.
Most importantly, stay in contact with your lender the entire time, because a lot of the questions you have may have different answers depending on where you live and the specifics of your situation.
It’s Not Impossible to Avoid Foreclosure
Remember, even in the direst of situations, it’s not impossible to avoid foreclosure. Be aware of your rights and make sure you’re not being taken advantage of. Make sure to keep in constant communication with your lender and show them that you’re making an honest attempt to pay the mortgage. At the end of the day, if the bank thinks that there is a good chance you will make good on the loan, they will likely give you some leeway.
Even though the thought of facing a foreclosure can be embarrassing, don’t ignore contacts from your lender. The more transparent you are with how you plan to avoid a foreclosure, the more likely your lender will be to give you a break.
Selling A Home That’s Facing Foreclosure
If you’re facing foreclosure and thinking about just selling your home, you do have options. SFL Partners buys homes for cash in any condition and any situation. Give us a call or fill out our quick form to get a fast, all-cash offer on your home.