Ten Tips to Avoid Foreclosure and Keep Your Home in Tough Times
Having trouble making your mortgage payment? Here are ten tips to help you avoid foreclosure and keep your home in tough times.
You've made your mortgage payment on time, every time from the time you bought your home, but you've lost your job, got sick or hurt, got divorced, taken on a lot of bills, or simply bought a more expensive home than you can afford right now. Or, your current mortgage is an adjustable rate mortgage, or ARM, and the interest rate and payment you originally signed up for has now gone up, or is about to go up.
You're worried that you could go into foreclosure, which means that the lender who gave you your mortgage takes your home if you don't pay your mortgage. Foreclosure also means that you are responsible for not only the amount you have left to pay on your home, but also other costs, such as legal fees. A foreclosure can hurt your credit score too, which makes it harder for you to get a mortgage and other loans in the future.
That's the bad news. The good news is that, depending on your situation, you may be able to save your home from foreclosure and protect your credit score too by following these ten tips:
1. Talk to your lender right away.
Believe it or not, your lender wants to help you avoid foreclosure, because it costs everyone involved a lot of time and money. But you need to talk to your lender as soon as you think that you may fall behind on your mortgage. The sooner you talk to your lender, the sooner you can get help to avoid foreclosure. The longer you wait to talk to your lender, the more you fall behind on your mortgage and the fewer options you have to save your home from foreclosure.
2. Don't ignore your lender.
If you fall behind on your mortgage, your lender may call you, email you, or mail you letters. Answer these calls, emails, and letters right away, because they contain information about how your lender can help you avoid foreclosure.
3. Work with your lender.
Your lender may offer you options to lower your mortgage payment or lower your interest rate, refinance your mortgage, or temporarily suspend your payments.
4. Get financial counseling.
Financial counseling can help you:
· Make a budget to help you avoid foreclosure now and prevent foreclosure in the future.
· Understand your options, legal rights, and responsibilities.
· Choose the best options for your situation.
· Work with your lender.
· Find programs that offer you legal, financial, or other help to avoid foreclosure.
Ask your lender about financial counseling.
5. Make a plan for spending and stick to it.
Food, clothing, shelter, and medical care are your most important necessities. Look at unimportant expenses that you can get rid of, things that you can sell for extra money, and other ways to cut costs and bring in more money. At the same time, look at which bills need to be paid first and which ones can wait.
6. Take action to safeguard your credit score.
A good credit score means lower mortgage payments, lower interest rates, and better refinancing options. Avoiding foreclosure protects your credit score. The sooner you talk to your lender, the easier it is to protect your credit score.
7. Ask about government-sponsored programs for foreclosure help.
There are government-sponsored programs available to help you avoid foreclosure. Your lender or financial counselor can help you find out if you qualify for these programs.
8. Refinance.
If your credit record is good and if you work with your lender, you may be able to refinance your current mortgage to change your payment, term, or interest rate to better suit your budget. If you have an adjustable rate mortgage, you may be able to refinance to get a fixed mortgage where the payment and interest rate stay the same for the entire term of your mortgage, usually 15 or 30 years.
9. Consider selling your home.
When all else fails, you may need to sell your home to avoid foreclosure and protect your credit score. In some cases, you can use the money you get from selling your home to buy a house that's easier for you to afford or let you rent until your situation improves.
10. Protect yourself.
Make sure to:
· Read everything carefully before you sign it.
· Ask a legal or financial expert to help you understand anything that isn't clear.
· Get any promises or details in writing.
· Avoid signing anything you don't understand or that seems too easy to do or too good to be true.
There are ways to avoid foreclosure and keep your home when times get tough, but only if you take action right away, work with your lender, get the right advice, and act on it. To learn more, visit our Payment Difficulties page.
These are general recommendations not applicable to all financial situations. Every financial situation is unique. Further, the suggestions and recommendations contained within the content provided are not an assurance of any future result. Be sure to discuss your specific financial circumstances with a legal or financial expert before you take action. Contact us for more information.
