No one likes to think about facing house foreclosure, but if you find yourself in that situation, there are some steps you can take to help avoid losing your house to foreclosure. These include renegotiating your loan with your current lender, refinancing your loan with a new lender, taking out a loan to cover your missed payments and filing for bankruptcy. Which of these options is best for you depends on your exact situation.
Your best options are generally those that you can work out with your current lender. Whether it's possible to avoid house foreclosure in that way is dependent on just how far things have gone, and whether or not your current lender is willing to work with you to make a plan to catch up on missed payments.
The simple fact is that your lender is no more interested in pursuing house foreclosure than you are. Foreclosing on a house makes no one feel good. It's expensive and time consuming for the lending company, and if they can find a reasonable way to get their money, they will usually be happy to take it.
You can pave the way for an agreement with your current company by doing some homework first. If you approach your lender with a well-considered plan that includes catching up on your missed payments within a few months time, there's an excellent chance that they'll accept your offer and reinstate your mortgage with little damage to your credit.
This will only work, of course, if you're now in a position to at least be able to resume making your regular monthly payments on time and in full. If your missed payments are due to an unexpected illness, accident, job loss or other circumstance that has since been taken care of, working with your current mortgage holder to come up with a reinstatement plan is your best option to avoid losing your house to foreclosure.
Start by sitting down with all your bills and listing every expense. Once you've laid out all of your fixed expenses, including current loan payments, your mortgage payment and your basic utility payments, you'll have an idea of the highest monthly amount you can offer to make in addition to your regular mortgage payment.
If additional payments aren't a possibility, but you CAN resume making your regular payments, your lender may be willing to add the missed payments into the principal of the loan for you to repay along with the rest of the loan - or even renegotiate the loan for a longer term or a lower interest rate.
Just keep in mind that your lender will be willing to work with you - as long as you keep the lines of communication open and approach them to help you avoid losing your house to foreclosure.