Some Ways to Avoid Foreclosure

Since foreclosures rose 4% in August 2010, it would appear that plenty of people are still struggling to pay their mortgages.  If you find yourself in similar circumstances, here are some ways to avoid foreclosure:

Avoidance is NOT the best policy - If your lender calls you, answer it.  If they leave a message, call them back.  If you receive a letter from your mortgage company, reply.  It's best to face your problems head on rather than running and hiding.  Mortgage companies are more apt to work with you if you are honest and upfront with them than if you ignore them.

Watch for the Warning Signs - Many times, significant life changes can bring about a change in your money situation, which, in turn, means a possible problem with your homeowner status.  These changes include the loss of a job (which many people are facing nowadays), an extended illness, the death of a spouse, divorce or a large increase in your mortgage payment (especially if you have a variable interest rate rather than a fixed one).  When changes happen, you will want to evaluate how this will affect your mortgage.

Pay Attention to Your Money Situation - If you find that your credit card bills and car insurance are becoming a bit much to handle every month, your mortgage payment is sure to become difficult soon, too.  It's best to establish an honest, monthly budget to see where your money goes, what absolutely must get paid each month and where you can curb spending. 

Call Your Lender - If you see that your money situation is encroaching on your ability to pay your mortgage, it is a good idea to give your lender a call to explain your situation - loss of job, medical bills, family emergency, etc.  Be honest with them.  Ask what kinds of programs or options are available to avoid having your home end up in foreclosure.

Some options to discuss with your lender may include refinancing, reinstatement (where you can pay a lump sum to get caught up on your payments, forbearance (the temporary reduction or cessation of your mortgage payment), a repayment plan or a loan modification, if you qualify.  Some programs available include Home Affordable Foreclosure Alternative (HAFA), Home Affordable Modification Program (HAMP) and Home Affordable Refinance Program (HARP) among others.  Check these out with your lender.

Watch out for scammers.  Unfortunately, when people find themselves in a desperate situation, there are predators out there who are willing to take their money.  If you are seeking help from your lender, it should be given free of cost.  If someone requires a fee up front to help, they are most likely scammers and should be avoided.

So, if you find yourself facing the possibility of losing your home due to any variety of reasons, here are some of the ways you can avoid foreclosure.  If you are looking to purchase a Reno foreclosure, please contact me soon.  I can help.