Bank foreclosure can be a frightening prospect. The fact that the bank can claim your car, boat, or home can cause a serious disruption in your regular lifestyle. There are some things that you can do to help avoid a bank foreclosure before it happens.
Stay in Communication with the Bank
No matter how far behind you get in your payments, always keep in contact with the bank. The bank will be more willing to work with you to resolve your issues if they understand your reasons for being behind in your payments. There may be nothing they can do to help, but if there is anything they can offer you they will be able to offer it if you are willing to talk with them about it. Avoiding phone calls and letters from the bank is the worst thing you can do in any situation.
Learn About Debt Handling Options
Do some research about the type of loan you have and what you can do to change the terms that you are unable to meet. It is possible that you would qualify for a debt consolidation loan or another type of mortgage to replace your current one. You should also look into bankruptcy options if you are facing an extreme situation. There are consumer protections in place that can ease the pain of a foreclosure if there is no way to avoid it. Talk with a credit counselor about what your options are and how you can possibly salvage your home or car.
Make Whatever Payments You Can
Even if you can not make the full payment that you owe on your debt, pay what you can. The bank will appreciate that you are willing to continue attempting to meet your obligation, which will make them easier to negotiate with about your loan. Any money that you pay toward your debt will go toward making the debt smaller, even if it is not the amount that the bank is asking for. You may be able to postpone any foreclosure actions by the bank if you continue to make good faith payments toward your loan’s balance. Let the bank know that you can not afford the full payment, then pay what you can.
For the thousands of people facing bank foreclosure, it is sometimes hard to see the options available and make a decision about what to do in time to avoid losing the home. One of the most important things to do if you are facing foreclosure is to learn your options, make a decision about what you will do and stick to it. Don’t waste time wallowing in denial and depression. By the time you pull yourself out of it, it may be too late.
The first thing you should do is talk to your lender. It is possible that they will work something out with you. However, it depends on the lender. Some of them are good about working with their customers while others are nearly impossible to deal with. Don’t waste too much time talking if you don’t seem to be getting anywhere. Just move on and try something else.
If you can find a company that will refinance your mortgage to a lower rate, you might be able to walk away with lower payments than you have on your current mortgage. This option is easier to pull off if you apply as soon as you realize you are going to have trouble paying your payments but before you actually fall behind. If you want to refinance, try doing whatever you can to earn extra money to keep up with your mortgage payments until the new loan is final.
If you are more concerned about saving your credit than saving your home, you can always try to sell it. Make sure you price the home reasonably enough so that it is likely to sell quickly because time is of the essence. If you owe more on the home than what it is worth in today’s market, selling may not be an option for you unless you can get the lender to agree to accept a short sale.
A short sale is a sale in which the lender agrees to accept less than the amount owed as full payment on the loan because the house is worth less than what is owed. Getting a lender to agree to a short sale is usually a complicated process that involves a lot of paperwork. Be prepared to jump through a lot of hoops if you choose this option.
Avoiding bank foreclosure is not as easy as many people make it sound. Many banks are hard to work with, houses take time to sell and people who are having a hard time paying their mortgage payments usually have a difficult time finding a new lender willing to take a chance on them. While there is always hope that you will be able to save your home, make sure you are realistic about your chances of success. Sometimes the best option is to save as much money as possible while the foreclosure process is proceeding so that you can afford to move somewhere else when it’s over.