How to Avoid Foreclosure
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You avoid foreclosure by not getting yourself into a sticky situation. Here are a few tips to safeguard yourself from entering foreclosure:
- Save Money – Surprisingly many Americans don’t save much money, or any at all. This will often result in no money for those ‘rainy days’. All homeowners should have saved six months of mortgage payments in savings to get by. At the very minimum, everyone should have 3 months saved up as a reserve.
- Have a Home Equity Line of Credit in place – Why? About 90 percent of foreclosures could have been prevented or delayed if a home equity line of credit was activated previously at usually a low rate paying nothing each if you haven’t accessed it. If you ever expected a big sudden health problem or a loss of a job, you can get access to emergency cash fast. When things get back in order, you can repay the line but you must be careful to not get careless with the equity line…you don’t want to deplete it.
- Don’t miss a payment on your mortgage – Skipping a payment can really rock the lenders boat and become a serious issue, even more far serious than missing a payment on a credit card and such. If you’ve missed a payment you’ve started to domino effect of possibly losing your home. Your credit will start to suffer and you may not be able to stop the foreclosure process on your home.
- Ask for help – Sure, you may be embarrassed, but the last thing anyone wants is to lose your home. You may be surprised of what type of help you can get by asking for it.
- Don’t ignore the lender – You really need to communicate with the lender and answer all of their calls. The lenders will appreciate knowing that you are having troubles but are being open with them about it. Ask them for a loan modification or find a way to work out the issue.
- Don’t live in denial – Face your problems and deal with them to find a solution.
- Don’t spend your money on other bills – After missing 3 to 4 mortgage payments the lender may accelerate the home loan – making you pay off the loan in full. At this point, you won’t be able to make good on the missing monthly payments. At some point, you are going to need those funds to save your house. You need to think about it – do you want to lose your house or can you live without your credit cards?
- Keep making payments – It is crucial to keep up with your mortgage payments. Making the payments shows to the bank that you are intending to pay them and are showing the effort. Keep in touch with the bank and make the payments needed to delay the foreclosure.
- Don’t miss bankruptcy filing deadlines – Proper filing of Chapter 13 Bankruptcy can stop foreclosure in its tracks and gives you time to pay back all creditors approved by the courts. If you fail to make those payments, then the foreclosure is restarted. Consult your attorney.
