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Avoiding Foreclosure

If you own your own home, it probably took you lots of time and effort to get where you are.  However, sometimes life hits you below the belt and can threaten the security of your home ownership.  If you are worried about being able to make your mortgage payments and the possibility of foreclosure, here are some tips that will help you avoid it. 


The first tip is that as soon as you even consider the possibility that you may not be able to continue to make your payments on your current mortgage, you should look into mortgage refinancing.  Before you miss your first payment gives you a much better chance to find a lender and secure a mortgage refinance.  If you have been in your home for several years, you may want to refinance to a 30 year mortgage in order to lower your mortgage payments considerably.  By doing this, you may be able to avoid foreclosure. 


Talking with your mortgage company as soon as you think you need to miss a payment can be very helpful.  Some mortgage companies will work with you and if you are in a temporarily bad situation may be willing to tack a couple of payments onto the end of the term so that you will have a chance to get caught up or to give you a chance at mortgage refinancing. There may also be some loan modification programs that can work for you. 


If you have equity in your home, you may want to consider a cash-out refinance to pay off some debt or to put in your savings account to use for future house payments while you improve your financial situation.  Your loan officer can help you determine if this is a good option for you. If your credit score has dropped because you have missed payments to other creditors, you may be able to get a bad credit mortgage refinance.  Even though the rates for this loan product are higher than for a traditional loan, they are still historically low and this type of mortgage refinance can help you avoid foreclosure. 

If you currently have an FHA loan, your lender may be able to work with you on a streamlined refinance that takes minimal paperwork and takes less time to finalize. 


If the legal foreclosure proceedings have already been started, you should call an attorney to help slow down the process and possibly negotiate a loan modification with your lender.  By keeping an eye on your financial situation and recognizing that you are getting into a tight spot, you will have more time to figure out what to do and which path to go down when faced with foreclosure.