There's A Lot That You Can Do To Avoid Foreclosure

With home ownership in America at an all time high and housing values having risen substantially over the majority of this decade, many people have a lot invested in their real estate. Unfortunately, as is becoming all too apparent with the problems in the housing market, the prosperity that many have experienced over the past few years has come at a cost. Many people are finding that because of the terms of their mortgages or unfortunate life circumstances, they can't make their payments are in danger of foreclosure.

Fortunately though, even with the the problems that are now confronting many homeowners, foreclosure isn't always necessary. That's because there are a number of different tactics that homeowners can take to either delay foreclosure or to eliminate the danger of this heart breaking event altogether.

While there are a variety of different measures that a homeowner can initiate to avoid foreclosure, the approach to the situation can make all of the difference. Basically, the most important thing is to be proactive rather than trying to pretend that the situation doesn't exist. In other words, when you realize that you won't be able to make a payment, the first thing that you should do is contact the lender institution and inform it that you're having trouble making payments. That's also the first step when it comes to preventing a foreclosure. Assuming that you end up missing some payments without contacting the lender, under no circumstances should you ignore phone calls or late payment notices from the lender.

Once you contact the lender, there are a number of steps that can be taken to deal with your financial situation. Which of these tactics you end up using will depend on your exact situation. For example if you've lost your job and expect to get a new one in a certain amount of time, you might be able to take advantage of forebearance and or reinstatement which both involve delaying any payment at all until you have a new source of income and then bringing the payments up to date by a set time at some point in the future.

Other tactics are more appropriate for people who will have longer term problems with making their payments. Perhaps you were forced to take a pay cut, got laid off of a job and had to take a lower paying one to replace it, or have a balloon type mortgage that's about to become a lot more expensive to pay on a month to month basis. The most talked about option for this situation is to refinance your mortgage. With a refinance, you're essentially able to take out a new mortgage and then use it to pay off the old one. Refinancing is an especially good option because it's often possible to get the first lender to accept an upfront payment that's less than the principal that you owe. In this case, you'll have less debt after refinancing than you did before. That's also why it's a good idea to take the initiative solve the problem before you get into trouble- the better your credit is and the more responsible you appear on paper, the more likely you'll be to get a good rate on your new mortgage!

In addition to refinancing your mortgage it may also be possible to get your current lender to modify the terms of the mortgage to make it easier for you to afford. Also, while it might be a much less satisfying solution, you might want to consider selling your house and then buying another one that's easier to afford.

While foreclosure can sometimes be an unpleasant fact of life for homeowners, there is plenty of help available to prevent this potentially devastating experience. With that help, foreclosure should be the option of last resort for most families.

By: Martin Schwartz