How to Avoid Foreclosure on Your HomeArticle Posted by Expert Author: Tony Caro on 06/10/2013
Times are tough for many homeowners these days. Keeping up with mortgage payments becomes much harder or impossible when facing the loss of a job. But what many homeowners don't know is that mortgages are negotiable, and losing your home is not the only option when you discover you are falling behind on your mortgage.
The Importance Of Forbearance
Forbearance is something that every homeowner who is facing the possible loss of their home should investigate further. Forbearance is an agreement between you and your lender which is specifically designed to help you delay foreclosure. In this agreement, your mortgage payments can be reduced for up to six months, which can give you time to find new employment.
If forbearance isn't an option, don't give up. There are still several steps you can take to avoid foreclosure.
Get Policy Friendly
Every lender has a policy for loan modifications, and it's important to get to know each one of them. You will get valuable information from the details they contain that will help you to navigate the entire process more smoothly and with less stress.
Your lender should offer some kind of loan modification package. What you will need to do is request this package. Requesting it doesn't require you to provide any personal information that may flag your lender that you are facing any trouble.
If your lender is willing to send you an application, you can then review what information requirements they have at your leisure. You can also use this time to reflect on answers for the questions they will have without having to feel obligated to answer quickly.
Notifying Your Lender
Next, you will need to contact your lender and let them know that you want a modification on your mortgage. This will entail completing forms with your financial information, including any other outstanding debts you may have. You will also likely need to provide a written letter which details not only how you lost your employment, but what your plans are or what you are already doing to get a new job.
While you may not enjoy waiting during such an unstable time, you may not hear back from your lender for a couple of months. This could mean that the foreclosure process may be underway. But experts advise that homeowners who are in this situation remain in their home and ensure they are in regular contact with their lender.
Even if it's a one-sentence email from your lender, it's important to keep a record of all of your communication. The same is true for phone calls either outgoing or incoming. Keeping strict records of all communication will help you ensure that your lender delivers what they promised.
Along with communication, all of your expenses should be documented as well. This means, specifically, your monthly budget. This will tell your lender how much you can afford to put toward your mortgage payments.
It's important to be aware that not all lenders will work with homeowners in the situations listed above. To be more specific, your lender may be willing to assist you with lowering your mortgage payments, but only if you are a certain number of days behind. This will give you only a short amount of time to work things out with your lender. Once your mortgage defaults, it can leave you with fewer options, as your credit rating will suffer.
If a refinance home mortgage isn't an option, don't panic - this is the first and most important piece of advice for any homeowner who may be facing possible foreclosure. You will need to keep your cool throughout the process. Remember that ultimately, it is your lender's decision whether or not to assist you with keeping your home. Sticking to only those factors you can control will help you to be able to think more clearly as the process moves along.
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