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Avoiding Home Foreclosure

Avoiding Home Foreclosure

These are tough economic times.  Jobs are difficult to find, companies have been laying-off employees and business operations have been closing their doors.  There is hope, however, as recent data points towards a long and slow economic recovery in the United States. 

That being said, many Americans have had to make some hard choices and re-evaluate their personal and business finances.  For most Americans, your home is your single greatest investment and retirement asset.  Keeping your home and avoiding foreclosure is essential to your future financial security.       

Are You at Risk?

Have you missed a mortgage payment?  The first sign of trouble for you that any lending institution recognizes about your financial health is getting behind on your mortgage payments. 

The best thing to do at this point is immediately contact your bank.  Most banks will work with you and present you with a variety of options to catch up.  You will be notified by your bank via the mail if you miss a payment.  Be sure and answer these notifications. 

If your loan is with a local bank it is always best to make a trip to the bank in person to discuss your circumstances versus calling them on the phone.  You will always be treated with more respect and dignity in person.  If you ignore these notifications you may face legal action by your bank so be sure to make contact immediately.  Do not ever be afraid or hesitant to make contact.  Most banks want you to succeed. 

Mortgage Rights for Borrowers

All loans or mortgages have a variety of loan documents that you authorized with your signature when you secured your home loan at the time of purchase.  Most banks will also have foreclosure prevention options in your portfolio.  Each state has different timeframes for home loan foreclosure issues so you also need to make contact with your local state government housing assistance agency or county office. 

Your local Housing and Urban Development Office or HUD also provides home loan counseling services.  They can assist you with finance consolidation, legal issues and rights, negotiations with your bank and other issues related to your home loan.

HouseYour Personal Financial Health

Stay within your budget.  This may not be possible during tough economic times and if you have lost your job.  However, you start identifying expenses that you can temporarily or permanently eliminate immediately.  Personal or family expenses that relate to entertainment such as cable television, satellite television, satellite radio, alcoholic beverages, vacations and even vehicle expenses can be trimmed.   

Many Americans have had to sell their newer vehicles and purchase less expensive used vehicles until they find employment again.  Another financial health option is to consolidate all of your credit card debt. 

As a last result, bankruptcy filing to eliminate credit card debt is possible but this will destroy your credit rating for the future.  You will always have difficulty securing a home or vehicle loan in the future if you file for bankruptcy. 

What do you have that is worth anything?

Did you have a pension plan when you were employed?  Do you have a 401K? Anything of value left in savings or a credit union? It’s a difficult and heart wrenching decision to tap into hard earned savings but you need to weigh the possibility of losing your home and family comfort in a given neighborhood versus financial asset to be utilized in the future. 

How about relatives?  If you have close relatives or friends that are financially secure they may be able to underwrite or guarantee home refinancing options. 

How abut valuables?  A thorough inventory of all assets that you own such as collectibles, books, equipment and art can be useful as well.  The advent of online auctions such as Ebay has made it easy for you to sell your collectibles and turn them into cash. 

Home Loan Foreclosure Scams      

Beware of internet scams offering immediate resolution to your home or business foreclosure problem.  There is no such thing.  The old adage of “If it sounds to good to be true” is appropriate in this environment. 

Do not give these sites any personal financial information such as social security numbers or bank account numbers.  Under any circumstance, do not provide the title of your home to anybody.  Always consult your banker or home loan institution in person if possible. 

Fixed versus variable Rate Home Loans

Although appealing, really low interest rate loans that offer a variable interest rate and that come with a balloon payment that you are obligated to at a later date are dangerous.  Most of these loans are tied to current interest rates to the really represent a personal financial gamble of sorts.  Interest rates fall but they also rise.  Your payment can be raised significantly at a fixed ate and in some cases beyond your earning potential as a burrower.  This is probably the number one reason for home foreclosure.  Always try to negotiate for the lowest rate possible for a fixed-rate loan.  Most bankers want your money in the form of interest payments or the ability to resell your mortgage so bargain hard.

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The official U.S. Government HUD Web site is HUD.gov


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