You have fallen behind on your mortgage payments, and the lender has sent you notices to try and collect the late payments and threatening foreclosure. What can you do to stop foreclosure on your home?
When facing foreclosure, many panic and give up, thinking that there are no other options to stop foreclosure and save their home. Well, here are some actions that can be taken to try and stop the foreclosure of your home!
Before any action, get your financial house in order. Calculate your income and expenses and determine what is really coming in and what is really being paid out monthly. If it is too much to do your own financial analysis, look for a nonprofit counselor that would probably do it free of charge and may also help negotiate with the lender. The U.S. Department of Housing and Urban Development, HUD, sponsors housing counseling agencies. Click here to find a list of HUD Housing Counseling agencies in your state.
Next, contact your lender and be sure to have an idea what you need from them, like some of the actions below.
Research economist James Gaines of The Real Estate Center at Texas A&M University, states
Come up with some kind of an answer to the lender’s question of how you propose to pay off the loan eventually. You’re better off to come in with an initial proposal. At least you’ve opened the door in the negotiation.
Try negotiating the following actions with the lender to stop foreclosure.
- Forbearance – postponement of payments, for a specified amount of time until you get back on your feet. You are allowed to delay or reduce payments for a short period, with the understanding that another option will be used at the end of that time to bring your account to a current status. Keep in mind, this could result in a higher monthly payment after the forbearance period, since you will have to make up the missed payments.
- Repayment Plan – also known as Loan Modification plan, allows you to repay part of the delinquency each month, along with you regular monthly installment. However, if the payments are too high or will be too high, ask for an extension of the loan for another five years, to reduce the monthly payment.
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