Steps to Avoid Foreclosure on Your Home

by Francine L. Huff

Old House Web Columnist

As adjustable rate mortgages reset, many homeowners are finding themselves faced with the possibly of foreclosure. Foreclosure filings rose 87% to 164,644 in June 2007 from a year earlier, according to RealtyTrac. The states with the highest number of foreclosure filings are Nevada, California, Colorado, and Florida. Foreclosure filings include default notices, auction sales notices, and bank repossessions. Here's what you need to know to avoid having your home foreclosed on.

Don't Miss Mortgage Payments

Pay your mortgage bill on time each month to avoid late fees and the possibility of foreclosure. If you're having trouble making your mortgage payments, contact your lender to explain your situation. Your lender may be able to work with you to temporarily reduce or suspend your payments. Be prepared to document any reductions in income or increases in living expenses that are contributing to your financial problems.

 If you have an FHA loan that is four to 12 months delinquent you may qualify for a one-time payment from the FHA-Insurance fund to catch up on your mortgage payments. You'll have to sign an interest-free promissory note and a lien will be placed against your property until the note is paid off.
Refinance Your Mortgage

Housing experts predict that borrowers of about $800 billion in adjustable rate mortgage loans will face increased payments through the end of 2008. Some of those homeowners may be able to avoid the shock of rising interest rates by refinancing their mortgage. When refinancing look for a fixed-rate mortgage or hybrid ARM that will allow you to have stable monthly payments with no surprises.

 Get Rid of the Property

It's best not to move out of the property until you've made arrangements to either sell it or catch up on your mortgage payments. But if you choose to get rid of your home, a pre-foreclosure sale (also called a short sale) will allow you to sell it for less than what it would take to pay off your mortgage loan. You also can choose to give back your home to the lender, which is called a deed-in-lieu of foreclosure.

If you're struggling to make your mortgage payments, don't wait to find a solution. Consider your options carefully and get help from your lender to avoid foreclosure. 

About the Author

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.

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