How to Avoid Foreclosing on Your Home Loan

As the real estate industry continues to struggle in this country, more and more families are being forced into foreclosure. However, it is important to remember that you have options as there are multiple alternatives to foreclosure.
Mortgage Loan Modification To prevent defaulting on the loan, you may be able to modify your mortgage by either refinancing it, or possibly extending the term of the loan. The goal is to modify your mortgage to payments that you can afford, so that you can stay on your house.

Debt Relief & Consolidation This option is a great first step if you are having other debt problems in addition to those with your mortgage. Debt consolidation allows you to consolidate all of, or most of, your debt into one easy monthly payment. In doing this, you are making it easier to manage your finances and mortgage payments.

Private Money Loans Private money loans are issued by lenders other than a bank and come in the form of ordinary loans as well as foreclosure bailout loans. They can usually secure you up to 65% of the value of your home, but keep in mind this is another debt that you will need to eventually repay.

Short-Sale Foreclosures are not good for banks either, and sometimes they will accept a low bid on the house in order to prevent it from going into foreclosure. A short sale is a negotiation between a bank and a buyer to buy the house for less than is owed on it. This will be a loss for the bank, but probably not as much of a loss as a sold foreclosed home would be.

Repayment Plan Some lenders will work with you to arrange a payment plan to pay off your loan in increments that you can afford. This can be especially useful if you are making money, but not quite enough money to keep up.

Principal Reduction In some instances, you may be able to lower your principal loan amount that can help reduce your monthly payments. However, the value of the home typically needs to have dropped by at least $100,000 to qualify for this type of program. This may sound like an easy option, but it is actually very complicated. If you are seriously considering principal reduction then you should seek the help from a trained professional who will know if it is a good option for you or not.

Deed in Lieu of Foreclosure The foreclosure process is a long and messy one, and if you are lucky then your lender will feel the same way. In some situations, you may be able to negotiate with your lenders to hand over the deed of your home in the form of payment. Although this is not an easy option, it is still much better than foreclosure.



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