How to Keep Your Home.
A potential foreclosure is one of the most frightening things that many people will deal with in their life. The prospect of losing one of the most important assets in your life often causes people to react with fear and anger. Those emotions, while natural, do not help anyone. It is important to stay calm and begin several crucial steps in order to increase the chance of keeping your home.
Contact Your Lender
While this is often the last thing on your mind, it is important to contact your lender as soon as you realize that you are going to have a problem. Do not be embarrassed or ashamed; everyone goes through financial troubles at one time or another. Many of the rights you have as a borrower hinge on communication with your lender. In order to exercise you rights to the fullest it is important that you open a honest line of communication with your mortgage company.
Know Your Rights
Step one of this process is finding all of your loan documentation and identifying what consequences are outlined by your lender in the official agreement.
The second step is to contact a state agency and identify the foreclosure laws of your individual state. While many laws are common on a national level, each individual state has specific laws regarding the foreclosure process. This HUD page contains great links to official state resources.
Prioritize Expenses
Identify which monthly expenses you have that can be reduced or eliminated, and which expenses can be put off until you are in a more financially stable position. After healthcare, your mortgage payment should be your number one priority. Credit cards and other forms of unsecured debt can be ignored until you have stabilized your mortgage situation.
Avoid Foreclosure Prevention Companies.
Though it is tempting to seek help from a “professional” organization, avoid spending money on services that can be better spent on paying your mortgage. The government has a great list of approved counseling agencies that will offer you advice and assistance free of charge.
Don’t Despair.
Fear and frustration are the norm, but that does not mean you have to give in to these emotions. You have options and rights granted by the federal government. Given the state of the economy, banks do not want to foreclose on your home. It is in their best interest to simply work something out with you instead of taking on additional expenses and property management responsibilities.