Today, nearly 1 out of every 6 homeowners in America is behind on mortgage payments. The last thing a homeowner wants to face is the possibility of foreclosure, but troubles with finances can happen suddenly and without warning, leaving a homeowner desperate. But foreclosure can be avoided, credit can be saved, and financial futures can be salvaged. First, identify the options.

There are a number of alternatives homeowners can consider. An experienced professional can steer you in the proper direction, so you can find your financial solution quickly and handle any mortgage and loan issues with care. Here are just a few suggestions how one can avoid foreclosure:

Modification – A mortgage modification involves the reduction of one of the following: the interest rate on the loan, the principal balance of the loan the term of the loan or all or any of the above. This typically results in a lower payment to the homeowner and a more affordable mortgage. With the modification plan, delinquent interest, taxes, and /or insurance payments are added to your unpaid balance on your mortgage. Homeowners who qualify for this program may be able to extend repayment of their past due bills over the remaining term of the loan.

Government Loans & Assistance Programs – Homeowners who can make the monthly payments on the mortgage may qualify for special government loans that create a second lien on their property for the unpaid amount. This money is then made payable to the US Government.

Pre-Foreclosure Sale – Foreclosure can wreak havoc on your credit rating. If you are in danger of losing your home and are unable to make payments, you have the option of selling before any marks can be made against your credit.

 Short-Sale – While this may be the best solution for some, it is important to understand that there are 3 “must-have” criteria to qualify:

1.    Financial Hardship – a verifiable issue that has or will cause you to miss payments or have financial difficulties

2.    Monthly Shortfall – When your total Monthly Income minus your Total Monthly Expense = Negative amount

3.    Insolvency – You must not have the means to pay down your mortgage.

You do not however have to be completely broke–this is a common misconception, the lender will want to see that over time you will not be able to pay your mortgage obligation. Having money in the bank for living expenses is common and will not disqualify you.

Temporary Forbearance

Another less common way to avoid a home foreclosure is to get a temporary forbearance on your mortgage, which means that you repay the back amount that you owe on your loan over a certain amount of time. This is good if you can afford to make your monthly payments, but had a crisis which forced you to miss a payment. When you choose to do a temporary forbearance to avoid a home foreclosure, you should know that your payments will usually increase slightly, but you will be able to get back on track with your lender and resume making your regular payments when you have repaid the back amount.

Different homeowners will qualify for different options to avoid foreclosure. Seeking the advice of a professional is a good step in preserving your property and your credit rating.

In my over-12-years in the real estate industry, I have witnessed many clients and friends lose their homes through foreclosure. That is why I specifically designed a department of this company to help other people avoid the foreclosure nightmares that I’ve witnessed. We know that good people sometimes have a few bad breaks.

No matter what, the worst option is to…
Do Nothing – Absolutely the worst.

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