7 Ways to Avoid Foreclosure on Your Home

avoid foreclosure on your home

In the final quarter of 2012, observers began celebrating the decline of foreclosure activity throughout the country. Foreclosure activity in the major real estate markets of the United States had dropped significantly, up to 62% as of October last year. In fact, some major cities had foreclosure levels drop lower than the levels in September 2007.

Rocky Road To Recovery

Though it is reason enough to celebrate, don’t think the real estate business is out of the woods just yet.

Housing expert Morgan Brennan of Forbes argues that the positive outlook exists on a national level, but what is happening in your own city is what is really important to you. Brennan says that as the real estate market tries to bounce back, it could just as easily see another wave of foreclosures before slowly entering recovery.

Tips To Avoid Foreclosure

This simply means that even if the real estate market is on its way to recovery, homeowners everywhere should remain vigilant. Follow these seven important tips to avoid foreclosure on your home:

Stop Denying The Problem

The first thing to do is accept that things are not going well. If you have not been able to pay your mortgage in the last few months, it’s time to face the problem head on and find ways to resolve it without getting the house foreclosed.

Make Your Mortgage Your Number One Priority

One thing you have to remember is that the best way to avoid foreclosure is to pay your mortgage. Therefore, this should now be your highest priority.

It’s very important that you keep this in mind. At this point, you should rank your mortgage as of similar importance as daily necessities just like food.

You may be tempted to believe that you should pay your credit card bills first before your mortgage, but this is a fallacy.

Your credit card bills will not get you evicted from your home.

You can deal with your unpaid credit card expenses later, but paying your mortgage should come first to prevent foreclosure.

Find A Way To Make The Payments

It’s important to find ways to pay your mortgage payments. Here are two ways to do that. First, you can try to cut back on expenses in an effort to save money.

Second, you could look for ways to increase your income.

A good way to do this is to begin with a spreadsheet that details your monthly income and expenses. Don’t leave anything out.

Now, check your expenses and see if there are any items you can remove for the time being.

Suspend your cable television account, if necessary.

Alternatively, you can supplement your income with a part-time job or a side hustle.

Related: Interested in Increasing Your Income? Excellent Work From Home Jobs

Always Maintain Contact With Your Lender

Running away from your lender is not an option. It may be tempting to hide away, but in reality, your lender is a very important part in avoiding home foreclosure.

Lenders don’t want to kick you out. In fact, it’s a good idea to contact your lender at once if you’re having trouble fulfilling your mortgage payments.

Show your lender that you’re willing to work things out by presenting an alternative payment plan.

Be honest in explaining your financial situation, and propose a payment term that will be agreeable to both parties. Try to negotiate for a lower monthly payment.

Use Your Assets, But Don’t Bankrupt Yourself

One thing to remember is that though it can be tempting to sell everything you own in an attempt to pay your mortgage, it isn’t always a good idea.

You could save your house now with this tactic, but it could leave you financially vulnerable. Plus, such a system can be likened to nothing more than a bandaid.

You’re not addressing the real financial problems preventing you from making the monthly mortgage payment.

Talk To a Housing And Urban Development (HUD) Counsellor

One problem that a lot of homeowners have is that they don’t understand their rights and obligations.

This makes the mortgage and the threat of foreclosure a lot more complicated. In the US a HUD counsellor can help you make sense of what’s happening. They can even talk to your lender and help you negotiate for a much friendlier mortgage payment system.

Consider Selling Your House, Quickly

If you find that you are in over your head and that no matter what you do you won’t be able to continue to catch up on your mortgage payments, then consider selling your house and sell it as quickly as possible.

Begin by contacting local realtors and invite them to your home for an initial consultation.

Ask them how much they could sell your house for.

Also, are there things inside and outside of your home that you can clean up and quickly fix to help it sell quicker?

Ask the realtor for suggestions and tips on how to sell quicker.

Once you choose a realtor, explain your situation to them. Of course the point of selling it is to avoid foreclosure, but you would also like to walk away with a few dollars in your pocket too. 

Ask your Realtor if they would be willing to or able to give you a break on the commission fees. Every few pennies that you can save will help you out in the long run.

I understand that this will depend on where you live, but that should be your goal.

Is foreclosure inevitable? It depends on how long you wait. Some people are so emotionally attached to their home and will continue to stay in it until they are kicked out. Others understand that it is just a house and that by working quickly they may be able to either save it or at least walk away with a few bucks in their pocket which they can use to begin rebuilding their finances and their lives.


    • DC @ Young Adult Money

      DC @ Young Adult Money 04/15/2013 5:18 a.m. #

      These are all great tips. I realize that sometimes foreclosure is unavoidable, but getting a second full-time or part-time job to help make payments or re-negotiating with a lender are things that everyone should try before going into foreclosure.

      • Sicorra

        Sicorra 04/15/2013 5:30 p.m. #

        Yes, it just depends on the timing, and how bad things really are. Too many people wait until they are in dire straights to do something about their situation, but if they admit that there are problems early on, then hopefully a second income will help them keep their house.

    • Laurie @thefrugalfarmer

      Laurie @thefrugalfarmer 04/15/2013 6:09 a.m. #

      Love this, Sicorra. It's interesting to me that the foreclosure numbers are down so much just because I still see so many people that are struggling to get by. I hope the numbers stay down, that's for sure. Your tips are great for those still struggling to make payments, though.

      • Sicorra

        Sicorra 04/15/2013 5:31 p.m. #

        Maybe it also depends on where someone lives and how the economy is in their area. I think there are still a lot of homes in foreclosure in Las Vegas for example too.

    • Glen @ Monster Piggy Bank

      Glen @ Monster Piggy Bank 04/15/2013 6:34 a.m. #

      Excellent tips Sicorra. I think that many people don't even consider the last tip until it is way too late and they end up having to sell their house for far less than it is worth.

      • Sicorra

        Sicorra 04/15/2013 5:33 p.m. #

        I know what you mean Glen. Perhaps people are too attached to their homes. But I think selling is better than being kicked out.

    • Shannon @ The Heavy Purse

      Shannon @ The Heavy Purse 04/15/2013 10:03 a.m. #

      Excellent tips, Sicorra. It's so important people who are unable to make mortgage payments not go into denial, which most do and unfortunately stay there until it's too late. If they act quickly, they may be able to get back on track following some of your tips - especially talking to your mortgage lender. You may be pleasantly surprised by how willing they are to work with you. And if not, then you know you need to buckle down and find other ways to earn more money or put your house up for sale while you still can. While you may hate the idea of selling your home, it would be better to be in control and potentially profit from the sale than have the bank do it for you.

      • Sicorra

        Sicorra 04/15/2013 5:35 p.m. #

        Yes, if you can profit from the sale or at least break even, then go for it. You can always buy another house after you sort things out. When I hear about all the foreclosures, especially on homes that are low in price to begin with, I wonder what the owners were thinking.

    • krantcents

      krantcents 04/15/2013 10:56 a.m. #

      Great advice! Avoid foreclosure if you can. Talking to the lender usually helps. Sometimes a attorney can help, but that may be expensive.

      • Sicorra

        Sicorra 04/15/2013 5:37 p.m. #

        I've read stories where people contacted an attorney and after he made a few calls for some reason they were able to continue to live in their home for up to 2 years without making any payments. Not sure of the details but I found that quite interesting.

    • Jae Mac

      Jae Mac 04/15/2013 12:11 p.m. #

      Last summer I found myself falling behind on mortgage payments and struggling month to month. I developed a detailed budget and eliminated and cut back on a lot of monthly expenses such as cable, dog grooming, and watching utilities more closely. I remained in constant contact with my lenders (yes lenders). Unfortunately we have a 2nd mtg as well anyway I applied for a loan modification,completed the trial modification and was approved in January 2013 for a permanent modification, my payments were literally cut in half. These are great tips for someone struggling to keep their home. There is help if you act early to avoid foreclosure and remain in contact with your lender.

      • Sicorra

        Sicorra 04/15/2013 5:38 p.m. #

        What an amazing deal you got. Congratulations to you for working on that and having it work out so well in your favor!!

    • Grayson @ Debt Roundup

      Grayson @ Debt Roundup 04/15/2013 12:23 p.m. #

      Foreclosure seems to be running up quickly these days. There are many homes in our area that are up in foreclosure. This can be a hard pill to swallow, but many just deny the problem and don't even contact their bank. There are also issues of many banks still not working with the borrowers and forcing the issue.

      • Sicorra

        Sicorra 04/15/2013 5:39 p.m. #

        Really? I've never understood why banks would rather loose money for months on end then help negotiate a better payment.

    • Corina Ramos

      Corina Ramos 04/15/2013 12:27 p.m. #

      This is very helpful advice Sicorra.

      Our mortgage is definitely a priority for us, that's the first thing on our list to pay. Thankfully we haven't had to experience foreclosure, I can imagine it's a frustrating and stressful thing to go through and I want to avoid that at all cost.

      Thanks for sharing these tips!

      • Sicorra

        Sicorra 04/15/2013 5:40 p.m. #

        Good for you guys Corina!! It is especially important to avoid it when you have a large family like you have. You don't want the kids to have to move, change schools, lose friends and so on. People just need to be more proactive.

    • Cassi

      Cassi 04/15/2013 8:02 p.m. #

      While foreclosure is horrible, one door opens when another closes. (I'm such an optimist)

      • Sicorra

        Sicorra 04/15/2013 8:13 p.m. #

        Well said Cassi! And I agree :-)

    • Justin

      Justin 04/15/2013 8:33 p.m. #

      It makes me pretty upset when banks won't work with people who are facing foreclosure. I know there have been a large number of people who just walk away from their home because it's underwater. But there are even more people who wanted to work with banks but were refused.

    • Mackenzie

      Mackenzie 04/16/2013 10:10 p.m. #

      I have a friend who went through a foreclosure and she is still dealing with the ramifications of it all.

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