When you are in danger of losing your home, these tips can help you fight to keep it. Here are four ways the average American can avoid foreclosure.
1. Find more money.
Can anyone in your household work a part-time job or bring in overtime pay? Can you rent out a room or even a parking space? Can you sell some valuable items for cash, such as antique jewelry, a second car or a life insurance policy? Even if these actions do not bring in all of the extra money you need, they can show your lender that you are willing to do whatever is necessary to stay in your home.
2. Cut down expenses.
If you cannot bring more money in, then you need to limit the amount of cash going out. Prioritize your expenses and decide what you can live without. Eliminate nice-to-have things such as gym memberships, cable television, restaurant dining and vacation travel. If you shrink your budget and still fall short, you may need to pick which bills you will pay each month. You may need to skip paying a credit card bill so you can put food on the table and keep the lights on.
3. Negotiate affordable payments.
If you still cannot afford your housing payment, contact your lender immediately. You need to be able to discuss the problems you are having, whether they are permanent or temporary and what solutions might help to ease your burden. Your lender may present several options, including
- Mortgage modification with a loan extension, an interest rate reduction or an inclusion of the past-due payments in the loan balance
- Special forbearance, which temporarily suspends payments until you get back on your feet and then gives you a payment plan for any overdue amounts
- Unemployment forbearance, which acts as a six-month special forbearance for men and women who have lost their jobs
- No-interest HUD loans or advance claims that bring a delinquent mortgage current but do not need to be repaid until the house is sold or the first mortgage paid off
- Refinancing through a convention loan or through the Home Affordable Refinance Program, HARP
4. Be honest with your lender.
Be willing to talk with your lender about foreclosure prevention options even before financial hardships come along. Knowing your options can help you plan for emergencies and take some of the stress away from possibly losing your home.