FORECLOSURE STEPS AND DEFENCE

If you are unsure of what to do about your home because you have started to fall behind on your mortgage payments or you are unable to sell your home because you owe more money that what your home is worth, do not panic. There are answers out there. If either of the above situations describe something similar to what you are going through, you need to act quickly. Waiting can only make matters worse.
The first way to avoid foreclosure is to look into refinancing your mortgage. By refinancing your mortgage, before you get too far behind, you may be able to refinance to a program that can give you at least a temporary fix until your financial situation gets back in order or until the housing market begins to improve once again. Look into adjustable rate mortgages that are fixed for at least a couple of years, interest only loans, or Pay Option ARM loans so that you can improve your positive cash-flow to help out with your situation and buy you some time.
Next, to avoid foreclosure, try contacting your lender to see if they will refinance you or if they can provide you with some assistance such as a forbearance or a loan modification. A forbearance will provide you with a temporary period of time that you will be permitted to either stop making payments on your mortgage or at least have your payments reduced for a short period of time. A loan modification is where the lender may be able to give you a lower interest rate on your loan, add on back payments to the end of your loan, catch up your late payments, etc... These two options are becoming increasingly common with the high rate of foreclosures. Lenders do not want to foreclose on you and they would rather avoid the foreclosure process if they can.
If you simply can not afford to keep your home anymore, then the best option as this point would be to sell your home. This way you can avoid foreclosure, find a more affordable home, or even a rental if necessary or desired, and save your credit from having a foreclosure reporting on it. If you are not able to sell your home for what you owe, then a short sale is a definite possibility and an option that needs to be considered. A short sale is when your lender agrees to accept a payoff that is less than how much you owe on the mortgage. You must submit a request for a short sale to the lender to be approved before you are permitted to sell your home for less than what you owe. If the lender agrees to your request, then the lender is agreeing to accept that as payment in full and you will owe them nothing further. However, a short sale could still have a negative impact on your credit, but it will still be much better than having a foreclosure on your credit.
Finally, if all else fails you can consider bankruptcy protection. A bankruptcy will temporarily stop the foreclosure process and your attorney may be able to negotiate something on your behalf with the lender. A Chapter 13 repayment plan option may provide you with a payment plan to follow so that you can avoid foreclosure and still be able to keep your home. Consult a bankruptcy attorney if you have exhausted all of your other choices to see what options you have available for yourself at this point and to find out if Bankruptcy may be right for you. Consider this only as an absolute last resort.
Therefore, even if your finances seem fairly bad or you are having a hard time selling your home there are many ways to avoid foreclosure. However, you must take action quickly and contact your lender as soon as you feel you are about to fall behind on your mortgage. Do not wait until you are behind. Contact mortgage lenders before you end up 30 days behind on your mortgage and this will leave more options open to you to refinance. Selling your home may end up being your best option, even if you need to do it via a short sale. After everything has been looked into and if there do not seem to be any options left you can always consult with a bankruptcy attorney so that you can try to avoid foreclosure.
The author of this article, Dave Zwierecki, is the President of First Security Financial Service and has over 10 years of experience in the credit, mortgage lending, and home improvement fields. He is the owner of http://www.gofirstsecurity.com and http://www.TheMortgageU.com which are sites devoted to the education of consumers regarding real estate, mortgage, credit, and home improvement related material.
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