What to Do If You’re Facing Foreclosure on Your Home
No one buys a home imagining that one day they’ll be facing foreclosure. Because of this, very few people have a plan for how to deal with the situation if it does arrive.
And with such a stressful and traumatic prospect casting a shadow over your life, it’s easy to put off doing anything about the problem until it’s too late.
However, if you’re having trouble making your mortgage payments and your lender is getting restless, it’s vital to take action while you can. Here’s what to do.
1) Don’t Be Ashamed
Although foreclosure proceedings aren’t at all pleasant, they also aren’t anything to be ashamed of. They can happen for any number of reasons, including changes in employment, family status, or overall financial circumstances.
To get yourself through the problem, you need to accept what’s happening and not let feelings of shame stop you from being proactive.
2) Get in Contact
Don’t ignore the letters and phone calls from your mortgage lender as you get further behind in your payments. It takes courage to face up to them, but it’s the only hope you have of finding a solution. By making contact, you’ll be able to start negotiations on a possible way forward.
You’ll probably find that your lender is much more understanding than you thought. No lender actually wants to go through the expense and hassle of foreclosure, and they’ll be happy to work with you toward a resolution if they can.
And in any case, if you fail to respond, the foreclosure process will only speed up, giving you even less chance to find an answer.
3) Document Your Finances
It’s important that you know exactly where you’re up to with your finances if you want to make progress. Your lender will also want a clear picture of where you’re at.
It won’t be a pleasant task, but make a list of all your debts, your monthly income, and your monthly outgoings. Make sure you can back this up with documentation such as bank statements and credit card bills.
Once you have everything laid down in black and white you can start to examine your options.
4) Look for Economies
Once you have your finances organized, look at any possible ways to cut back a little and save some money. If you’re in deep financial trouble, this might be unrealistic. But it’s surprising how much difference even small savings can make, if you can put the money toward your mortgage arrears instead.
5) Speak a Debt Counselor
Your mortgage lender will probably have suggestions about how to go forward, such as restructuring your loan or taking a payment holiday. You may be happy to discuss these options with them yourself, but most people find this idea highly stressful and intimidating.
If possible, sign up with a local debt counseling organization who can advise you about your lender’s suggestions. They may even be willing to negotiate a plan on your behalf.
If you’re lucky, you could find a non-profit service in your area who can help. If not, you may be able to sign up with an agency who will work with you for a fee.
However, be very careful before paying over any money. Although honest agencies exist, there are also plenty of bad apples who’ll happily take your money without doing much in return. This will only make your situation much worse.
5) Think Seriously About Selling
With plenty of effort and persistence and not a little luck, you’ll hopefully find your way out of the foreclosure nightmare. But it pays to be prepared for the worst case.
Start looking at your options for selling your home yourself before it’s taken away from you. Is it possible you could find a low-price buyer for a quick sale and still have enough to clear your mortgage?
Remember that foreclosure isn’t necessarily the end of your problems. If your lender can’t clear the debt by selling your home at auction, you’ll still be on the hook for the balance. Being proactive and selling quickly could be the best long-term solution, however difficult that seems just now.
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6) Don’t Be Secretive
And lastly, don’t try and hide what’s happening from your family and friends. Foreclosure is a serious and stressful situation to be in, and you’ll need support to help you through, whatever the future holds.
But most importantly of all, take action now. Ignoring the situation won’t make it go away. If you don’t take charge, things will only spiral out of control beyond any chance of saving your home.