How to Stop Foreclosure

A general flow chart of the steps you should be taking when the prospect of foreclosure becomes a real possibility might look something like this:

1. Investigate current rates to see if refinancing could lower your payments. Less money going towards interest means you’ve put your self closer to being able to make your mortgage payments.

2. Cut every cost possible. While the pretext for many foreclosure situations are usually extreme, unexpected circumstances, every cost that isn’t absolutely necessary to get by for a while should be carefully scrutinized. Cutting costs is the easiest way to increase your income.

3. Seek out additional sources of income. While this may sound obvious, many financially distressed individuals fail to see many small revenue earning opportunities that when added altogether could lead them out of financial insolvency. Odd jobs, freelancing, volunteering for medical research, anyway to pick up $30 here and $50 there should be considered.

4. Call your mortgage lender. Attempt to negotiate favorable allowances while you get back on your feet.

5. Consider possibility of short sale.

Foreclosure should only happen after all of those stages have been crossed.

I have a suggestion in regards to making a little bit of extra money to meet your payments.

Consider renting out part of your house. Maybe you can convert your den or family room into an extra sleeping space and rent it out to a single person for so much per week, plus a deposit up front. This would be instant cash in your hand and it could be a short contract with the tenant to help you get caught up and also to alleviate any housing problems that your tenant may currently be having in his search for an apartment or house. This will save him money and add money to your budget at the same time.

You may also ask your church for assistance. They could make a special passing of the plate on you behalf.

Also, in searching for some side jobs, run classified ads in news papers, post your ads on the internet, and write up flyer to pin up on your local merchants’ free bulletin boards. It would help to include a little bit about your desperation to gain the sympathy of the people considering you for a job. Plus, if you are selling on eBay as mentioned in the earlier blog entry, put your call out for sympathy there as well. I remember a lady selling things on eBay so that she could get enough funds to put a fence around her property and keep her rescue dogs safe. She did well with her sales pitch in expressing her needs, I was compelled to make a purchase from this lady and contribute to her cause.

It was said that every year one million families in the US are faced with the problem of losing their home to foreclosure by the lenders. It is very natural in the current scenario high cost homes to take a mortgage when building a house for living. But over time the cost of life may add up and we may end up being unable to pay the debt on time.

Always communicate with your lender whenever you know or think that you are going to miss payment or pay late. The lender acknowledges this and may give you a chance to pay late or so. But this can hurt your credit score in the first instance.

Some times it is possible to negotiate the repayment plans with the lender. The repayment strategy will allow you to accumulate due payments and better pay them over a long period of time.

If some thing sounds fishy with the lender always check with HUD.gov to verify if the lender is approved to lend mortgages.

A short sale or selling the house at a lesser than market value will help. But it is the last resort that should be taken.

Always have a plan for growing your business so that you pay the mortgage on time and even better. Work hard, save money, invest in the market and have multiple streams of income to avoid accumulating debts. As always said prevention is better than cure.