Foreclosure is a nightmare no homeowner wants to face, but that doesn’t mean you can stick your head in the sand if you’re having trouble making your mortgage payments.
Foreclosure costs lenders money, so they have an incentive to try to work with you to avoid taking that step. The thing is, you have to take the first step to try to work with your lender – the earlier, the better. This is the kind of problem that gets harder to solve over time, so it’s important to summon up the courage to get help as soon as possible.
Here are some suggestions from the nonprofit Homeownership Preservation Foundation, which helps homeowners avoid foreclosure through a free counseling service called Homeowner’s HOPE™. http://www.995hope.org/
• Prioritize bills. Food, shelter (your house) and utilities should be top priorities when money is tight.
• Be proactive. If an unforeseen financial crisis such as a job loss or medical problem hits, your lender might be able to temporarily suspend or reduce your mortgage payments. Before you miss a payment, call the lender and ask if any options are available.
• Be smart. If you are considering refinancing the mortgage to lower your monthly payment, weigh your options carefully. Mortgages with balloon payments or early interest penalties carry significantly higher default risks, according to a study by the University of North Carolina.
• Pick up the phone. If you miss a payment, call your lender immediately to try to work something out short of foreclosure. You can also call a service like Homeowner’s HOPE first – (888) 995-HOPE -- to better understand your options. Homeowner’s HOPE is a network of HUD-approved counselors who can help you set up an action plan for your situation.
Remember, if you are facing possible foreclosure, you’re not alone, so don’t try to go it alone. Foreclosure resources include:
• The U.S. Department of Housing and Urban Development, or HUD has published Tips on Avoiding Foreclosure.
• The Federal Reserve Board has a Web site with links to numerous government and private foreclosure avoidance resources.
• The Homeownership Preservation Foundation can be reached online at www.995HOPE.org, or by phone at (888) 995-HOPE (4673).
• NeighborWorks America teamed up with the Ad Council to reach out to struggling homeowners.
• MyMoneyManagement.net is an alliance of financial services companies providing links to these and other resources for avoiding foreclosure. The site is also available in Spanish.
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