How to Avoid Foreclosure if You Can't Afford Anymore
- 1). Contact your lender as soon as you know you are unable to continue making your current mortgage payment. You do not have to wait until you are late or in default to make contact. Many lenders would like advance notice. If you are proactive, you can perhaps work out alternate arrangements and avoid foreclosure.
- 2). Talk to your lender about the possibility of a loan modification. This would enable you to negotiate new loan terms. Your lender could lower your interest rate or give you more time to pay off the loan. Both of these actions may lower your mortgage payment to an affordable level.
- 3). Contact the federal government's Making Home Affordable program, established to help the millions who lose their homes each year. This program provides incentives to lenders to help their customers stay in their homes. You could potentially get a loan modification or refinance, even if you are in financial trouble.
- 4). Talk to an attorney about the possibility of filing bankruptcy. This action will enable you to postpone the foreclosure process. During bankruptcy, the court will issue an automatic stay, meaning your lender cannot continue the foreclosure process. This can buy you time to consider other options. Getting your other debts forgiven could free enough resources to make your monthly mortgage payment.
- 5). Offer your property title to your mortgage lender. Known as a deed in lieu of foreclosure, this action can be better on your credit than a foreclosure. You will still have to relocate, but get started rebuilding your credit much sooner.