Avoiding foreclosure and defaulting on your home mortgage loan

What is foreclosure?

If a borrower does not make the required mortgage payments, the lender can legally take over (foreclose) the borrower's home who must move out of the home. If the home is worth less than the total amount owed on the mortgage loan, the borrower may have to repay the difference on the loan as well. Foreclosure should be avoided at all costs since it makes almost impossible to get a mortgage or any other loan in the future.

How can foreclosure be avoided?

If you do not have money to make your monthly mortgage payments, contact your lender and explain your situation and provide them with your monthly income and expenses. Your mortgage lender many be able to arrange a payment plan, provide a temporary reduction or suspension of payments. Alternatively, you may be able to refinance the mortgage and extend the term of the mortgage. There are instances where a borrower can qualify for an interest-free loan from HUD. It is important to speak to your mortgage lender and explain your problem so that they may offer a solution.

What is pre-foreclosure sale?

A pre-foreclosure sale allows a borrower to sell their home and pay off the mortgage loan in order to avoid foreclosure. There are certain conditions under which a borrower can qualify which depend on the appraised value of the home, delinquent months and how fast the house can be sold.

Where can I get help?

Borrowers should contact their lender to explain the problem and see if the lender can offer a solution. You may also contact a non-profit housing counseling agency which can advise you if you qualify for any other help. Stay in your home so that you may qualify for credit assistance and explore all possible alternatives to loosing your home.