Most economists agree the housing crisis remains the biggest obstacle to economic recovery in the US. But there's no consensus on how best to fix it and the rate of foreclosed properties has hit a record high.
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If you are having trouble paying your mortgage for any reason, or expect problems, you should work with your loan servicer (the company that collects payments on your mortgage) or other experts to find a solution now. If you fall behind and don't take action, the lender will foreclose on your home. If that happens, you may lose your home and all of the money you have already invested in it. The sooner you act, the better the chances you will avoid foreclosure.
Talk To Your Lender
Talking to the lender, or loan servicer, the company that collects the payments, should be one of your first steps. The earlier you call, the better your chance to work out a solution.
Here are some options:
Loan Modification. Loan servicers can help you catch up on late payments or amend your mortgage to make it more affordable. For homeowners who face losing their home, a loan modification is often the most effective way to avoid foreclosure. The options include:
- Adding all the missed payments to the loan amount and changing the monthly payment to cover the larger loan.
- Giving you more years to pay off the loan, lowering the interest rate, and/or forgiving part of the loan, to lower your monthly payment.
- Switching from an adjustable rate mortgage to a fixed rate mortgage, so you can avoid higher monthly payments.
- Requiring amounts for taxes and insurance to be included with your monthly mortgage payment so you avoid big bills in addition to your mortgage.
Other options include:
Repayment Plan. If you can start making payments to catch up, the lender may let you pay an additional amount each month until you are caught up.
Forbearance. Lenders may let you make a partial payment, or skip payments, if you have a reasonable plan to catch up. Tell your lender if you expect a tax refund, a bonus, or a new job.
Reinstatement. Reinstatement refers to making a payment that covers all your late payments, usually at the end of a forbearance period.
Sign Over the Property to the Lender in Exchange for Debt Forgiveness (often called "deed in lieu of foreclosure"). This can hurt your credit, but is better than having a foreclosure in your credit history.
Watch out for companies that ask you to sign papers that waive your right to pursue legal actions against them—especially if you expect to continue struggling with your home loan.
For immediate advice, call 888-995-HOPE to speak to a counselor on how to avoid foreclosure. Available in English and Spanish, 24/7. Or visit www.995hope.org for more information.
Do you see trouble ahead for making your mortgage payments? Here are some things to do now to make it through…
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The threat of facing a foreclosure is a not a trivial thing. It can lead to anxiety or depression. The thought of losing your precious home can be frustrating and embarrassing especially if it’s your biggest investment.
A foreclosed home attracts more buyers who want to invest in cheaper, but good properties, and grab a superior investment opportunity. Seeing your home in public auctions is the worst thing that can happen to any homeowner.
Overcoming a foreclosure is difficult and the truth is you are actually caught in a situation faced by many homeowners. In fact, foreclosure rates have significantly increased during the past few years. Homeowners are beoming overwhelmed with the process and worried about their situation that they find it really tough to pull themselves out of all the financial anxieties.
Fortunately, there are a few companies offering stop foreclosure assistance—things you need to learn to save your home. But make sure you opt for legitimate services so you won’t get hooked on scams. Doing thorough research online can help you find legitimate services. Aside from getting information and solutions from a reputable organization, you can also consider some efficient tips or tricks on how to stop foreclosure and secure your home.
One of these tips is to learn about the things you should NOT do if you want to prevent the foreclosure procedure.
In reality, lenders are more willing to give you a list of options that can help you save your property as opposed to you having to sell your home in a public sale or spending thousands on a complicated foreclosure process. They are even more interested to know what caused your failure to pay your credit and if you can still remedy the situation.
So, don’t ignore their calls because they won't just go away by you not doing anything. Don’t file a bankruptcy right away if you haven’t yet talked with your lawyer or tried other options. Don’t be in too much of a hurry to settle everything with loan modification if you can’t assure you can afford the interest rate. While getting modified loans is another way to protect your home, you should be aware that some companies want to benefit from this option so they occasionally adjust the interest rates.
Don’t spend on things you don’t really need. Instead, make plans to boost your income. These days there are lot of easy tips that can help you earn money even if you’re at home.
To summarize, talk to your lender, DON'T ignore the past due payments. You may be surprised how willing they are to work with you.
Free online software for the creation of personalized mortgage modification applications under the federal Home Affordable Modification Program (HAMP) and other lender programs is now available from FreeMortgageFix.com. Borrowers can complete an application to modify existing home loans via the site’s user dashboard.
According to Jonathan Ende, CEO of FreeMortgageFix.com, "by using our free online program, homeowners now have a quick and dependable option for dealing with unaffordable monthly payments and the threat of foreclosure. As this concern continues to escalate nationwide, we wanted to provide an equally affordable and helpful solution that can help turn families’ lives around in less than 15 minutes.”
Based on the borrower’s specific financial situation and lender, FreeMortgageFix.com software completes more than 100 different calculations and analyses to compile a customized report.
After the site confirms the homeowner’s debt-to-income ratio, net present value, and general eligibility, the appropriate lender forms are automatically populated and printed for submission with a customized cover sheet addressed to the lender.
Homeowners are also provided with tips, solutions, and warnings, as well as an online resource center, custom document checklists, a conversation log for maintaining notes on all discussions with the lender, and a to-do list manager.
External financial and legal assistance is also available if users require them, including a network of approved attorneys.
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