Steps to Avoid Foreclosure on Your Home

by Francine L. Huff

Old House Web Columnist

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.

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.

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. 

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.