Sean Bryant is the marketing manager for Inzopa.com. Inzopa is a private network of homebuyers, owners, mortgage lenders and real estate agents.
The mere thought of facing foreclosure on your home can cause a lot of stress and anxiety. The thought of having to leave a home that you have put a lot of money, time and built dreams around seems unthinkable. Losing your home to foreclosure proceedings can leave a permanent scar on your credit and financial future. Even if you cannot find a way to stay in the home, you should at least find a way to get out from a foreclosure.
Control Your Household Budget
When you find that there is not enough money to cover all of the expenses and the mortgage payment too, it is time re-evaluate what is important and any unnecessary expenditures in the budget. Reducing credit card debt and impulse buying will be critical to making your bottom line work. Is having the biggest cable package worth losing your home? Reduce and cut expenses wherever you can. Less eating out and entertainment might be the way to find those extra dollars in your budget that you need to pay the mortgage.
Refinance Your Mortgage
If you know that paying your mortgage payment will be an ongoing problem, reach out to your lender and see if there is any way to refinance for a lower interest rate and payment amount. Most would rather work something out with you than have to go the foreclosure route. It’s critical to contact your lender before you end up missing payments, because your payment history will have some bearing on whether they will offer a refinance plan for you. Get all new documents and place them in a file for your records.
The Affordable Housing Program introduced by President Obama contains a lot of helpful options to reduce your payment or get out of an upside down mortgage without foreclosure. The HAMP program specifically can reduce your payment by nearly half, if you qualify. It’s worth checking into if you are in a mortgage that has high interest rates and you are drowning in debts. The programs are all managed through HUD, so contact them and find out what they can do to help in your particular situation. [Editors note: You may also want to look into the HARP Program, if you are not behind, but just underwater on your home.]
One solution to avoiding financial disaster with a foreclosure is to sell the home for the amount that is actually owed. A real estate agent can list it as a short sale. This means that it is offered at a lower price than normal, usually, but that is dependant on the amount owed. Potential buyers will make offers on your home, but the final decision is whether your lender approves the new buyer.
Filing for bankruptcy is not the optimal method of avoiding foreclosure, but it might make sense if you are in debt with a lot of creditors and see no way of meeting obligations for a long period of time. A bankruptcy will stay on your record for a few years, but it can keep you in your home and help you get some debt off of your back. It might allow for the breathing room you need to stay afloat.
Finding a way to avoid foreclosure can take a little bit of research and work, but ultimately you want to preserve a good credit rating for future purchasing power. Whether you can stay in the home or not, simply getting rid of the threat of foreclosure can provide relief from stress and worry. Check out your alternatives today.