Nobody plans it thus nobody wants it to happen. Just like unwanted events in family life, losing the house is considered as the most dreadful. Home foreclosure is the last thing you want because this entails auction of the property to recover the investment made by the lender. But it’s not always enough to cover for the total investment hence deficiency judgment could be filed against you.

Reasons for foreclosure: Too much debt obligation, medical emergency and sudden loss of a family member, marriage break up which resulted to loss of secondary source of income, unexpected employment, and the inability to settle adjustable interest rate which increased dramatically.

So here are some helpful tips to avoid foreclosure:

• Repayment Plan: This is only applicable if there are few missed payments. If your lender agrees, through this you will be able to spread out missed payments for a longer term.

• Note modification: This is applicable for adjustable loans. You can make an arrangement with your lender to modify the interest rate which will be more manageable for you.

• Refinance: This is a way to increase your loan balance so you can add back payments then re-amortize your loan. This is applicable if you have enough home equity.

• Take advantage of forbearance: This is a form of agreement between a borrower and a lender giving more time to wait for repayment. Talking to your lender explaining that you are going through hard times explaining your situation bad I hope if the house was acquired in good faith then there becomes some sort of good alliance between you and your lender. This is better than ignoring notifications sent by your lender which could signify your intention not to pay.

• Debts forgiveness: Again good communication matters, although it rarely happens, this is a good way to ask your lender to give you more time to repay your mortgage loan. It simply requires that you make a commitment of making succeeding payments current.

Prior to foreclosure, the lender files a Notice of Default against your property. This is a form of public notification which could impair your good credit standing. Always remember to update your lender about the possible date of your repayment. In most cases, lenders become unwilling to negotiate once foreclosure procedures have initiated.

Some other means to deal with foreclosure include selling your property, considering a short sale. Be smart in selling your property by reaching out to expert sellers and obtaining some tips to get the best offers. Short sale applies when the price of your home is less than that of the money you owe. Whichever of these two remaining options you choose, you are bound to lose your home. Well, at least you are not ending up with bad credit.

Know more about Foreclosure from this article: http://portal.hud.gov/hudportal/HUD?src=/topics/avoiding_foreclosure

This entry was posted on Tuesday, March 8th, 2011 at 2:06 pm and is filed under Foreclosures. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.