Prevent Foreclosure - How to Prevent Foreclosure of your Home
If you are facing foreclosure, you should know that there are several options you can try before you lose your home. Investigating these options is worth it when you are in financial dire straits. Keep in mind that the first time you miss a payment; you are on the track to foreclosure. Educate yourself about these options so you can take action and save your home.
The first option to avoid foreclosure is to refinance your existing loan. If you have good credit and your loan was obtained when interest rates were higher you may refinance your loan at a better rate. The refinanced loan will have lower monthly payments. These lower payments may help you stay on top of your debts better. If you have equity built up in your home, you can use that equity to pay off other debts with higher interest rates, like credit cards.
If refinancing isn’t an option, your mortgage lender may be able to help you with a loan modification. With this tactic, your lender and you will enter a new contract with different terms from your old contract. The amount of the loan will stay the same but the length of the loan, interest rate or type of loan may change in your favor. For example, moving from a 15 year variable interest rate mortgage to a 20 year fixed rate can lower your payments and save you money in the long run.
If neither of these options works for you, there are still options available. The Federal Housing Administration (FHA) offers free financial counseling. Simply contact the FHA and see if there are counselors in your area. If there aren’t you should be able to get counseling over the phone. The counselor will go over your financial paperwork and advise you on programs in your state, city or region that can help you avoid foreclosure.