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How to Avoid Foreclosure

One of the biggest fears for any homeowner who have not paid off their mortgage is being issued a foreclosure order. After all, nobody wants to lose their dream home and be stuck in a financial mess. Unfortunately, there’s a recent spike in foreclosures in the United States. According to a property data provider, a total of 15,838 foreclosures were filed in August 2021, which is a 60% increase from last year’s numbers. This dramatic spike in foreclosure filings is due in part to the discontinuation of the government’s pandemic moratorium order, which is allowed homeowners to postpone payments. 
 
In this article, we’ve listed some tips to help you prevent your home from foreclosure. 

Talk to your lender

Your lender does not want to see your home get foreclosed. This might be difficult to believe, but it’s in the best interest of your lender to avoid more complications and paperwork. If you find yourself to be in a scenario where you might not be able to make house payments due to a short-term financial hitch, be sure to talk to your lender immediately. 
 
Your lender will be more than willing to give you other options to pay for your home’s mortgage loan. For example, they can agree to help you out by granting you a forbearance, which is the temporary deferral of your loan payments. As long as your lender believes that you have a valid reason for missing payments, they will most likely give you a grace period. Be sure to talk to your mortgage lender as soon as you find yourself in a tough financial spot, so they have ample time to figure out what solution works best for your particular scenario. 

Work with a counselor and financial advisor

There are two professionals who can help you out in case you miss your mortgage payments. A financial advisor can help reconfigure your finances and figure out a budget so you don’t miss a payment again. Financial advisors often use software and calculators to help clients manage their finances and break down budgets. In addition, these professionals are equipped with a degree in accounting, which allows them to take care of their client’s taxes and find a solution to their client’s money woes. 
 
Another professional who can help you avoid foreclosure are housing and urban development counselors. These professionals can familiarize you with laws related to foreclosures and timeframes in your state. Moreover, HUD counselors can help you explore your repayment options and provide you with the right representation when you negotiate with your mortgage lender. 

Consider refinancing your home loan 

Your lender may refuse to grant you forbearance and other financial options if you have a bad credit score and history. When this happens, you can talk to a private mortgage lender in the hopes of getting a hard money loan. While refinancing into a hard money loan can help you prevent your home from foreclosure, it also has extremely high interest rates and fees. Because of this, it’s best to reserve this option as your last resort. Failing to consider the future state of your finances and pushing through with a hard money loan can put your home in danger of foreclosure down the line. 
 
Every homeowner should do all they can to protect their home from foreclosure. The best way to do this is by improving your finances and avoiding situations that put your financial stability in jeopardy. 
 
However, not everyone is fortunate enough to have a stable life. If you feel like you won’t be able to make your monthly mortgage payments due to an emergency, be sure to keep in mind the tips we’ve listed above and they should provide you the right assistance in times of distress. 

Article submitted by Cristina Clarke for newhomeprograms.com 

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