Avoid Home Foreclosure
While none of us can foretell the future, it is important to understand how to avoid home foreclosure. Not only can foreclosure have a devastating impact on credit but homeowner's can lose thousands of dollars in home equity in their homes. Here are some of the best options to avoid home foreclosure.
Do not ignore lender communications
Once a homeowner has missed a mortgage payment, their lender will likely be in contact with them. While some may feel that it is best to ignore mail or telephone calls, this should be avoided at all costs. Homeowner's should keep in mind that a lender has no vested interest in beginning foreclosure proceedings on a home. Lenders are not in the business of owning real estate, they are in the business of lending money. Accept calls from the lender, speak with their loss mitigation department and see if it is possible to work out a repayment plan.
Explore other financial options
For some homeowners, there may be options to catch up on late mortgage payments by tapping into other financial resources. Some potential options include borrowing from a 401(k) plan, borrowing against an existing life insurance policy or borrowing against another property such as a vacation home or investment property. When negotiating with lenders does not work, these options should be explored. Before borrowing against any other asset, it is crucial that you carefully review any loan documents and be aware of all consequences including tax consequences.
Consider selling the home
There is a possibility that in order to avoid home foreclosure, a homeowner may be able to sell their home. This may be a simple solution that can be accomplished by listing the home with a local real estate professional, or by making the decision to do a for sale by owner sale. Before taking this path, the lender must be notified of any intent to sell if the legal process has begun. If the lender has already started the foreclosure process, this may not be an option.
While none of us wishes to think about losing our home, it is impossible to predict the future and what could happen. Whatever the case, understanding the various options available can help a homeowner prepare better for the future. Home ownership is a serious commitment and one that comes with great responsibilities. Being prepared for any possibility makes good sense and can help many avoid future problems.
Avoid Home Foreclosure