You never imagined it would happen to you - but here you are, facing foreclosure and about to lose your home. If you find yourself in a situation where foreclosure is a very real possibility, there are steps that you can take to stop foreclosure and keep your home.
Your first step should be to decide whether it's actually feasible to hold onto your home. Generally, if you suffered a problem - an illness or job loss that made it difficult to make your mortgage payments, and since then, you've gotten back on your feet, you may be in a position to hold onto your house. In addition, your house payment and insurance should be less than 40% of your monthly income.
If your housing costs are greater than 40% of your monthly income, then you're better off selling your home and trying to recoup your credit. If you've decided to stop foreclosure AND keep your house, thought, you have several possible options.
Your first option to stop foreclosure should always be negotiating with your current mortgage holder. Their goal is to get their money - not take your house away. If you can assure them of your ability to make payments now, and renegotiate your mortgage terms with your current lender, you can stop the foreclosure, and possibly even survive the ordeal with nothing worse than a few bruises on your credit record.
This strategy to stop foreclosure is most likely to work if your credit to this point has been generally good. Even if you don't think it will work, you owe it to yourself and the lender to try to renegotiate with them first.
If refinancing your mortgage through your original lender isn't a possibility, you may still be able to stop foreclosure by taking out a second mortgage through another lender. Usually, a finance company will require that your total debt be less than 75% of the equity in your home before they'll consider making a loan.
If you can't negotiate on your own behalf, you can turn to a non-profit group that helps people to repair their credit. They'll negotiate with your creditors, including your home mortgage lenders, and help work out a payment plan that works with your budget.
Your last resort is bankruptcy. If you have no other options, and no other way to stop foreclosure, declaring bankruptcy under Chapter 13 can allow you to pay off your outstanding debts over a period of 3-5 years while still retaining your assets.
Facing foreclosure is unpleasant, but knowing that there are ways to stop foreclosure and keep your house can help you get through it with as little discomfort as possible.