Steps to Avoiding Foreclosure

Several life changing events can turn our worlds upside down. From losing a good job to medical expenses, you can end up in a situation of financial uncertainty. We find ourselves lost and not sure what to do. We have bills and if we don't pay them our electricity will be turned off and if we don't pay our credit cards then our credit score goes down. If you don't pay your mortgage then you can lose your home. This can be a very trying event and it is difficult to know what to do first and what should be paid.

If you find yourself heading towards foreclosure then you need to begin take steps to avoid it. Begin by assessing your financial situation and put your pride on a shelf because it is time to fix this problem no matter how embarrassing it may seem. The first step to take is to contact your lender as soon as you know that your mortgage payment is going to be late. You also do not want to ignore any phone calls or letters that you may be receiving. They may sound threatening but they really don't want to take your home away from you. If you ask for help, they are more than happy to work with you and figure out what they can do for you.

There are solutions if your problem is temporary. For example, you may have lost your job but you are going to find another. You may need a little time to find one and get your first paycheck. In this situation you can usually use forbearance. In forbearance, the lender allows you to delay your payments for a short period with the understanding that you will be able to bring your account up to date after that time period.

Reinstatement is also a possibility when you are behind on your payments but you are able to promise the bank a lump sum to bring your account current. A lender may also combine reinstatement and forbearance so that you will know that you have to have the funds by a specific date.

Repayment plans are also an option. If you account is past due but you are in a situation where you can make your payments the lender will usually agree to help you by adding a portion of your past due payments to a number of your future monthly payments.

Mortgage modifications may be available if you are able to make your monthly payments but you are unable to catch-up the debt. The lender may agree to modify the mortgage so that it includes the pas due amount and finances it in with the loan.

If you are in a dire situation and you don't see yourself being able to make the monthly payments you may be able to do a Deed in Lieu of Foreclosure. This is when the lender allows you to give back your house and forgives the debt. This will still have an impact on your credit, but it won't be as devastating as a foreclosure.