| Foreclosure is a process that many homeowners | | | | If you have equity, consider taking out a second |
| fear, especially in today's economy. There is good | | | | mortgage or a HELOC. Be sure you can make the |
| news though, there are ways to avoid | | | | payments on the second mortgage. Keep in mind |
| foreclosure. Here are 7 ways to stop foreclosure. | | | | that if you pay the first mortgage and don't pay |
| 1. Pay mortgage on time | | | | the second, the second mortgage holder can then |
| Make your payments on time. I know it sounds | | | | foreclose. |
| silly but it's not. If you make your mortgage | | | | 5. Bankruptcy |
| payment you will not be in danger of losing your | | | | A Chapter 13 bankruptcy is a "reorganization". You |
| house. | | | | will have to make payments for the bankruptcy |
| If you are not able to pay all of your creditors, | | | | and continue to pay all existing payments on time. |
| consider which bills you are going to pay. Your | | | | A Chapter 7 bankruptcy is a forgiveness, but not |
| mortgage is attached to your house and if you | | | | likely to be approved when you have an asset |
| don't pay your mortgage, the bank can foreclose | | | | such as a house. |
| and take your house. This is not the case with | | | | This is a temporary solution. You must perform |
| credit cards. Credit cards are unsecured debt, | | | | according the bankruptcy terms in order to keep |
| they can file a lien against the house but they | | | | your house. If you file bankruptcy and do not |
| cannot force a foreclosure. | | | | make your payments to the bank, the bank can |
| 2. Call the bank and ask for an adjustment in | | | | be excused from the bankruptcy proceedings and |
| payment | | | | move forward with the foreclosure. |
| You can contact the bank, your attorney, or you | | | | 6. Sign a deed-in-lieu of foreclosure, giving the |
| can contact a loan modification company that | | | | house back to the bank |
| specializes in working with banks to modify | | | | You can sign the house over to the bank. Then |
| mortgages. | | | | they will not have to go through legal proceedings |
| There are a few ways to modify your existing | | | | to foreclose and you will not have a foreclosure |
| mortgage. | | | | on your credit report. You can then move on with |
| 1. The bank may allow you to make up the back | | | | your life. |
| payments over time. Many times if the problem | | | | 7. Sell your house |
| that caused you to miss your mortgage | | | | If you cannot afford the house, consider selling it. |
| payments has been corrected. For example you | | | | You are selling the house because you cannot |
| were fired and now have a new job, the bank | | | | afford the payments. This may be your last |
| may allow you to make up the missed payments | | | | resort, other than the house being auctioned at |
| over a period of time. This means you will have | | | | the foreclosure sale and you being kicked out. |
| an additional monthly payment on top of your | | | | If you have equity, list the house below market |
| monthly mortgage payment. For example, if you | | | | value to entice buyers. Don't be greedy. |
| owe $6,000 in missed payments and the bank | | | | Remember the reason you are selling the house is |
| may allow you to make payments of $500 a | | | | because you cannot afford it and the bank will |
| month over the next 12 months to cure the loan. | | | | take it away from you leaving you with nothing. |
| You then have to make your monthly mortgage | | | | It's better to make a little bit of money from the |
| payment plus the $500 payment, otherwise you | | | | sale than get nothing at foreclosure. If you can |
| will end up back in foreclosure. | | | | sell the house for what you owe, or just above |
| 2. The bank may put the missed payments on | | | | what you owe, you will prevent yourself from |
| the back-end of the mortgage. Again, if you have | | | | going through foreclosure. |
| corrected the problem that caused you to miss | | | | If you owe more than the house is worth, list the |
| mortgage payments, the bank may put the | | | | house for the current value. If you want to be |
| amount you owe for the missed payments on | | | | aggressive, list the house just below market value |
| the back-end of the loan and extend the term of | | | | to entice buyers to purchase your house instead |
| the loan. You will then just need to start making | | | | of your neighbor's house. The Realtor can contact |
| your monthly payments. | | | | the bank to request a short sale. A short sales |
| 3. You can ask the bank to adjust the terms of | | | | means the bank will accept less than what you |
| the loan. Again, if you have corrected the problem | | | | owe to satisfy your debt. Be sure to get a letter |
| that caused you to miss mortgage payments, the | | | | from the bank stating they will not come after |
| bank may change the amount of your monthly | | | | you for the difference. You may also owe income |
| payment, adjust your interest rate, or change the | | | | tax on the difference. Why? You borrowed the |
| amortization (length of time of the loan, for | | | | full amount from the bank and received the funds |
| example 15 years to 30 years). For example, if | | | | so the IRS considers it income to you. Also keep |
| your payment is $2000 and month and you can | | | | in mind, the bank is not obligated to accept a |
| only afford $1500/month, the bank may adjust | | | | short sale, they are doing so at their discretion. |
| your monthly payment, lower your interest rate, | | | | You can sell through a Realtor. Check with the |
| or change the loan to an interest only payment. | | | | Realtor to see what the Days on Market is in |
| You then need to make sure you make your | | | | your area. If the days on market is 120 days and |
| monthly payments on time. | | | | the foreclosure auction is 45 days away, you |
| 4. The bank may consider combining these items. | | | | need to an aggressive Realtor who will do |
| For example, put the missed payments on the | | | | everything they can to sell your house now. You |
| back-end of the loan and lower your monthly | | | | must tell your Realtor when the auction is, they |
| payment. This will allow you to make your | | | | can contact the bank and ask the bank to |
| monthly payments on time. If you are able to get | | | | postpone the auction. Keep in mind, the Realtor |
| the bank to modify the loan, you must make the | | | | works on commission. If there is no equity in the |
| payments going forward otherwise you will be | | | | house, many Realtors will not touch it because |
| back in foreclosure. | | | | they want to get paid. You may also consider |
| 3. Increase your income | | | | paying the Realtor out of your pocket so that |
| There are many ways to increase your income. | | | | you can get the house sold. |
| You can ask for a raise at work if you are doing | | | | Another option is to sell your house to an |
| a good job and have a valid reason, such as a | | | | Investor. Investors can be creative and provide a |
| high level of productivity. You can get a Second | | | | solution that meets your immediate needs. |
| job to bring in more income. Maybe you have | | | | Investors also do not charge a commission that a |
| room in your house to take in a tenant who pays | | | | Realtor does. The Investor is a Buyer and they |
| you rent. You can also consider selling something | | | | want to buy your house. Investors can close |
| such as that luxury car, or, large screen TV, | | | | quickly. If you are a few days away from the |
| motorcycle, boat, etc. Think about what is more | | | | auction , many times the investor can close the |
| important, watching TV every night or keeping | | | | purchase of the house before the auction or get |
| your house? | | | | the auction postponed because they have the |
| 4. Refinance or take out a second mortgage | | | | house under contract. |
| If you have equity in your home, consider | | | | Many investors also have other properties |
| refinancing to get a lower payment and/or pull out | | | | available and are willing to work with you to put |
| some cash to make up the missed payments. Be | | | | you in another home that you can afford. They |
| sure you can make the payments on the new | | | | can also help finance you in the new home so you |
| mortgage and afford the closing costs. | | | | can still own a home and correct your credit. |