How Can I Prevent Foreclosure And Save My Home?

There are many different reasons why there are so many foreclosures in America today. Unemployment rates are at a record high, many consumers made bad loan decisions in the recent past, and people living off of commissions are seeing their income dramatically cut in this economic crisis. If you are one of the hundreds of thousands of people that may be facing a home foreclosure you probably have a lot of questions. However one of the most frequently asked questions is how can foreclosure be prevented? There are many ways that you can avoid foreclosure and even a few ways that you can still save your home.

Probably the best course of action is to talk to your mortgage company immediately after learning of any financial difficulty. Especially in these hard economic times mortgage companies will do just about anything to avoid a foreclosure. Foreclosures are extremely costly to lenders and there really is not much recourse that a lender can enforce to get their money back. That is why it is in their best interest to help you out as best they can.

The options available to you will really be dependent on your situation. For example if you lost your job briefly but have found gainful employment with the same salary range you may be able to add your missed payments and any fees and penalties to your loan. For example if you owe $10,000 in missed payments and penalties and you have 15 more years left on your loan, you may be able to add the $10,000 to your loan and spread it out through the 15 years so you only owe around $55 more per month. You can also opt to add this as a balloon payment to the end of your loan. With a balloon payment you will owe the entire $10,000 at the very end of your loan. You will have the option to pay more monthly to reduce the balloon payment, or you can refinance your loan at any time to include the balloon payment.

Let’s say you were in a situation where you lost your job and found a new job with a much lower salary, or if you are working on commission and your salary will be reduced until the economy turns around. You may be able to refinance your home or do a loan modification. With this scenario your mortgage company may be able to reduce your interest rate or extend the life of the loan to lower your monthly payments. For example if you have a monthly payment of $2,600 over the course of 15 years, you may be able to extend your loan to 30 years and reduce your monthly payments to $1,300 per month in order to save your home from foreclosure.