Facing Foreclosure? Steps You Can Take To Limit Your Loss
Many thousands of homeowners are facing the unthinkable. They are unable to pay their mortgage due to financial hardship or an interest rate adjustment and now they are facing a foreclosure on their home. The prospect of losing one’s home can be a frightening one, but there are several things that the homeowner can do to limit the pain and regain their footing when facing a foreclosure.
Talk to your lender
Many homeowners make the mistake of not talking to their lender when they run into problems with paying their mortgage on time. Some individuals shy away from talking to their lender because they are embarrassed about their situation, while other individuals are in denial and thinking that they will be able to fix the issue before they have to deal with a foreclosure. The truth is that talking to the lender and explaining the dilemma is one of the best ways to stave off a foreclosure.
If there is a temporary hardship that is impeding your ability to pay your mortgage, such as the loss of a job, then the lender may be able to work out an agreement with you that will improve your ability to remain current on your mortgage. The lender needs to know about your change in circumstance and about your willingness to do what you can to remain in your home. If you refuse to talk to the lender, they have to assume that you are willfully neglecting your responsibilities and will have no choice but to begin foreclosure proceedings.
Attempt To Sell The Home
In many instances, it is better for the individual to try to sell the home than face a foreclosure and the many years it will take to repair their credit afterward. If the home is sold for more than what is owed to the lender, the homeowner will get to pocket the difference. This may be difficult in the current market downturn as many of the homes facing foreclosure are “underwater” (meaning that the homes are worth less than what is owed on the mortgage) and many lenders will not allow the home to be sold for less than what the mortgage is worth.
Be Proactive
One of the best ways to limit your loss when facing foreclosure is to be proactive about your problems and try to solve them as soon as you recognize that there is going to be a problem. For example, if you are having trouble paying your mortgage now and you know that your adjustable interest rate is going to rise soon, don’t wait until after the rate has risen and you have begun missing payments to try to solve the problem. As soon as you recognize that you will not be able to make the mortgage payments, get on the phone and talk to the lender about your situation or begin to try to sell the home to limit your loss and avoid foreclosure on the home.
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