The foreclosure process begins when you fall behind on mortgage payments. This legal process allows the mortgage lender to take possession of the home in order to recoup their money. You are then forced to move out of the home and will lose any equity that has built up on the property. As this can have a serious impact on your financial future, it is best to avoid this process if at all possible. So what should you do if foreclosure seems eminent?
First and foremost, talk to the lender. Do not avoid communication, but ask to speak to the Loss Mitigation Department. See if they will work with you. Stay in the property while doing so otherwise it may be considered abandonment and you will most likely not qualify for any assistance programs.
In addition to speaking to the lender, contact a HUD approved housing counseling agency. They are a valuable resource that should never be overlooked as they can provide you with government programs which can help to save your home. The counseling agency may also be able to offer information about community and private organizations who offer the same services. Some offer credit counseling at no charge.
To avoid foreclosure, certain programs may be offered. You may be able to set up a payment plan which is known as a special forbearance. Mortgage modifications may possibly allow you to stay in your home also. Here you will refinance or extend the terms of your loan in order to become current. Some qualify for a partial claim. This is a one-time payment obtained from an FHA-Insurance fund which will bring your mortgage current and allow you to start fresh. Conditions do apply when a partial claim is requested so be aware of this also.
If you are unable to continue making the mortgage payments even with the assistance programs mentioned above, you may wish to sell your home. Some choose to go with a pre-foreclosure sale. Here you will sell your property for less than what you owe on your current mortgage. As with a partial claim, certain conditions must be met to hold this type of sale. Your final option is a deed-in-lieu of foreclosure. Here you voluntarily turn the property back over to the lender and walk away. Although you won't have your home, your credit won't be as badly damaged as with a foreclosure.
Consider all options when foreclosure seems emminent. Many are able to save their homes while using these programs. Others are not, but are able to walk away with less damage to their credit. If you are unsure of which route is best for you, speak to a counseling agency. They can help you choose the right course of action for your situation.
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