Foreclosure is one of the most terrifying financial possibilities out there; having the bank repossess your home not only puts you and your family at the risk of immediate homelessness, but it can instill deep feelings of fear, guilt, shame, and sadness. It impacts every part of your life and so often feels out of our control–job loss, medical emergencies, or economic downturns can lead to foreclosure and sometimes it feels like there’s nothing we can even do to stop it.
While nothing about foreclosure is good news, the truth is that we do have a degree of influence over the process and–with hard work and knowledge of the options available to us–we can sometimes avoid foreclosure entirely, even when times are tough. We hope nobody reading this has to ever go through the process, but here are some tips for avoiding foreclosure should you ever find yourself in this awful situation.
Lenders aren’t robots–they’re real businesses made of real people, and they have a vested interest in seeing a return on their investments and loans. Foreclosure isn’t something a bank wants to do; it’s the last resort for them just like it is for you.
All this is to say that most lenders would much rather work with you to keep payments flowing in than work against you to try to take your house, and the more proactive you are with your bank, the more likely they are to help you out.
Don’t ignore your mortgage problems and let them pile up, don’t let bills and mail from your bank pile up without opening them (ignorance does not stand up in housing court), and always contact your lender as soon as you realize you’re going to have issues making payments.
Often, when you simply talk with your bank and explain your situation, you’ll receive options to help–they won’t wave a magic wand and make your troubles go away, but they may offer payment installment plans, deferred payment options, and other solutions to help make getting back on even ground easier.
One of the biggest reasons foreclosure feels like an uncontrollable inevitability for so many people is that the process itself can be complicated and opaque, with homeowners feeling overwhelmed by the bureaucratic enormity of the situation. But with a little research and some good resources, it’s entirely possible to learn the ins-and-outs of the process, understand each step, and have a solid sense of your rights and options.
The U.S. Department of Housing and Urban Development (HUD) has a great starting point for dealing with a potential foreclosure. It recommends that you start by reading your mortgage contract to understand your legal rights, what options your lender may use to pursue foreclosure, and the timeframe for each part of the process.
They also link to federal loss mitigation services, which are government services to help homeowners avoid foreclosure and keep their homes, even when the going gets tough. These include the Making Home Affordable (MHA) Program, FHA assistance, and access to HUD-approved housing counselors. Many homeowners don’t even realize that such programs exist, and arming yourself with knowledge of these options is one of the easiest and most effective ways to help stave off foreclosure.
While access to outside support and government programs can really help you out of a jam, at the end of the day, your mortgage will still need to be paid to avoid foreclosure, and that will mean getting your finances in order one way or another.
This means doing a deep dive into your budget (or creating one if you haven’t yet done so) to find where you can cut back on spending–it’ll be hard, but pulling back on just about every non-essential spending may be what you have to do to save your house. Looking into your assets (cars, jewelry, electronics, etc) and seeing what you can sell is another option that nobody wants to do, but may be necessary to make ends meet.
Financial responsibility also means doing proper research into what won’t help with foreclosures. There are plenty of companies (both legitimate and scams) that prey on people in dire straits, offering the same foreclosure prevention assistance the HUD will give you for free, but charging you significant money that could otherwise be put towards your mortgage payments.
Foreclosure is a significant financial trauma–it’s scary, unsettling (both emotionally and in the literal sense), and is something nobody wants to go through at any point in their lives. But if you do find yourself facing a potential foreclosure, just know that there are things you can do to take control of the situation and mitigate the impact.
To help avoid foreclosure, sometimes you need some help making ends meet so you can keep paying the mortgage on time and in full. At Spotloan, our simple online application process can help you qualify for the money you need, even if you have bad credit or need a loan quickly. All you have to do is go fill out our application to see if you qualify, and you could receive a decision within minutes. Fill out our application now!