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.
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.
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.