Did you know that there were more than 200,000 home foreclosures in the United States of America in 2020? There are a lot of things that go into owning a home, like homeowners insurance and your mortgage payment. It is a large financial burden and if anything goes wrong it could put you in a big hole.
No one wants to get into a situation where they’re worried about foreclosure prevention but it is better to be safe than sorry. A big part of homeownership is knowing what to do if you’re faced with a situation where you need to know how to prevent foreclosure.
The good news is that you’ve come to the right spot to learn more about the best way to prevent foreclosure so that you’re always prepared. Keep reading to learn more.
Gather Loan Documents
The first thing that you need to do if you’re worried about foreclosure is to start gathering the important loan documents for your home’s mortgage. Getting organized will make life much easier for you and your foreclosure prevention attorney since all of your necessary documents for building a case will be in one place.
Make sure that you include your monthly billing statements, a record of all the payments you’ve made so far, as well as your insurance information and property tax info. This will make for a much easier road to travel in your future if foreclosure does look imminent.
Learn Your Legal Rights
Another important thing to do when it comes to foreclosure prevention is to learn about your rights as a homeowner. Be sure to read the loan agreement documents for your mortgage so that you know what will happen if you’re no longer able to make your payments.
This will help you know if you can reinstate your loan and how much money you’ll face for your monthly late charge. The law prevents your lender from starting the foreclosure process on your home until 120 days of delinquent payments occur.
Get Your Financial Info Together
Once you’ve read up on your legal rights as a homeowner you’ll want to start getting your financials together. This means getting your pay stubs from your job as well as bank statements and tax returns. Start figuring out what your total income is on a monthly basis. Then compare that to your monthly expenses.
This information helps to determine if there is an alternative route you can take to avoid a foreclosure.
Understand Your Budget
The nice thing about knowing your income and your expenses is that you can cut out any unnecessary expenses and you can have a clear picture of the amount of money you have to work with. Make sure that you’re diligent in looking at your spending habits and finding areas where you can save more money.
There could be little things like a morning cup of coffee from your local cafe or it could be things like a monthly streaming service subscription. It is important that you find ways to eliminate unnecessary spending from your expenses if you want to prioritize foreclosure prevention.
Know Your Foreclosure Prevention Options
You should also make sure that you get foreclosure prevention counseling in order to go over your foreclosure prevention options. One option is loan modification. This could involve you lowering your monthly mortgage payment with the consequence of taking a long time to pay off the loan.
You could also look into a forbearance program if you’re facing unfortunate and temporary circumstances that prevent you from making your mortgage payment. Reach out to your lender to see if this is an option for you.
Call Your Lender
It might seem like an odd approach to take but don’t be afraid to call your lender and ask about your options. Many people avoid doing this until it is too late. At that point, the lender won’t be able to help you and the foreclosure process will start. A good approach is to call your lender as soon as you miss your first mortgage payment.
Avoid For-Profit Foreclosure Prevention Companies
Unfortunately, there are a number of foreclosure prevention companies that prey on people in situations like yours. They’ll promise to help you out with your possible foreclosure but it will end up costing you a ton of money. They’ll also claim to provide foreclosure prevention counseling.
The majority of the time, companies that offer services like that are a scam and a big waste of money. You’ll end up in an even worse situation than you started in when you first reached out to them. Avoid using these companies if at all possible.
Learn Your State’s Foreclosure Laws
This is a great thing to do with the help of a foreclosure prevention attorney. They’re the experts in your area’s foreclosure laws and will bring you up to speed about your options and the road ahead of you. This is important because each state has its own foreclosure laws.
Knowing the laws will help you figure out how long of a time you have to negotiate a deal before a foreclosure happens. It will also help you understand your rights as a citizen and a homeowner as you go through the foreclosure process.
If Worse Comes to Worst, Sell Your Home
If all else fails then there is still one more option that you have at your disposal. If you can’t work out a deal with your lender then you can always try to sell your home before the foreclosure process starts. This is especially true if you have equity in your home. You can sell the home back to the lender and use the equity to pay off your mortgage payment debt.
Start Learning About Foreclosure Prevention Today
Foreclosure prevention is an important thing to learn about when you become a homeowner. No one pictures going through the foreclosure process when they close on their dream home but life is unpredictable. Don’t hesitate to get foreclosure prevention counseling or seek the help of a foreclosure prevention attorney.
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