One of the most important steps you can take to prevent your home from going into foreclosure is to communicate with your lender. You should do this as soon as you realize that you are going to run into trouble when it is time to make your mortgage payment. Make your lender aware of the financial struggles you are facing. The second step is to work with the MHA or Making Housing Affordable Program.
When you miss mortgage payments the lender can take legal means to take over your home. If this happens you must move out of your home and you could be pursued for a deficiency judgment. Foreclosures and deficiency judgments will seriously affect the ability for you to qualify for any type of credit in the future. It is important to avoid these actions whenever possible.
When you contact your lender make sure you provide them with financial information including your monthly income and your expenses. Do not move out of your home otherwise you may not be able to qualify for assistance.
Types of assistance you may be able to qualify include:
- Special Forbearance which could provide a temporary reduction in your payments.
- Mortgage Modification in which you may be able to refinance or extend the term of your mortgage.
- Partial Claim which would allow the lender to work with you in order to get a one-time payment from the fund run by FHA to bring your mortgage up to current.
- Pre-foreclosure sale which will allow you to sell your property to avoid foreclosure. You must sell the property for an amount that is less then what is necessary to pay off the mortgage.
To determine if you qualify for any of these alternatives, contact your lender, a counseling agency or a mortgage attorney.