10 Tips for Facing Foreclosure

If your struggling to stay afloat in this economy here's some helpful tips. There's almost nothing more stressful than the thought of losing your home because of foreclosure. No matter how bleak  your financial situation may seem, you still may be able to avoid having your home foreclosed on. Foreclosure is something you absolutely want to avoid if at all possible, it ruins your credit score for years afterwards, so much so that you might find a landlord that will let you rent.

1) Face the problem head-on: If you have fallen into the habit of throwing all your ominous-looking mail from your mortgage lender into a pile stop! If you don't open it you don't know what they are trying to tell you. Respond to  your mail quickly, you could be directed towards foreclosure options. Many counselors say this approach happens too often people avoid dealing with the problem until it's too late to do anything.

2) Contact your lender and explain your situation: this may scare you to death but do it! Depending on your circumstances, your lender may reduce your interest rate, lower your monthly payment or agree to plan for any payments you've missed. This won't happen in every case but you stand a better chance if you talk to them sooner than later. Finding a the right lender to call may pose a problem since mortgage loans often get sold over and over again. Start the process by calling the company that receives your mortgage payments. Just remember to be persistant.

3) Understand your mortgage rights: dig out the pile of loan documents you received when you bought  your home and start scanning them for answers to the question, "What can your lender do to you if you're unable to make your mortgage payments?" Knowing this answer will help you have a productive conversation with your lender. You will also learn about specific foreclosure laws and time frams in your state.

4) Consider selling your home: this maybe one of the most painful decisions but it could be right to keep you afloat. Selling your home on your own terms sure beats having your home taken away from you. The money from the sale could cover your mortgage debt and selling costs in full. Even if it takes time to sell your home the decision could relieve your stress immediately. Your lender will suspend foreclosure proceedings once your home is on the market. Your lender may even allow you to stop making mortgage payments until your home is sold.

5) Explore short sale options: if your home can only be sold for a dollar amount that's less than the amount you still owe on it, a short sale could be right for you. A short sale will take what you can get for the house and forgive the rest of the balance owed.

6) Don't give your money away to the wrong people: you may very well be approached by foreclosure prevention companies that will offer to negotiate with your lender on your behalf. Don't do it! Best case scenario the company will be legitimate but will take thousands of dollars to help you.  Worse case scenario you sign your home over to a fraudulent company in a foreclosure rescue scam.

7) Seek out legitimate help: since there have been so many scams to come from this here are some helpful legitimate resources- housing counselor approved by the US Department of Housing and Urban Development (800)569-4287; housing counselor affiliated with the National Foundation for Credit Counseling (866)557-2227

8) Set financial priorities that fit your current circumstances: when you're feeling absolutely overwhelmed financially it can be difficult to know which bills to pay first. Here's some things to keep in mind- Keeping your home should be a top priority. In negotiations with your lender, you can show how serious you are about making things right by demonstrating that you've sold assets, taken on extra work and eliminated optional monthly expenses, all with an eye towards reinstating your mortgage loan.

9) Consider filing for personal bankruptcy protection: this is a last ditch tactic to be sure but its better than foreclosure. With a foreclosure your home will be taken away from you and your credit rating will be seriously damaged and you'll still be saddled with all of your other debts. All of this can make it very difficult for you to find housing again. A bankruptcy filing also will hurt your credit rating for years to come, but here are the key differences: you'll be solvent and debt-free, and with a Chapter 13 bankruptcy you may get to keep living in your house.

10) Maintain your self-esteem: try hard not to panic or beat yourself up right now. This is a time to stay sharp and take charge of your situation. Remember that you're certainly not the only homeowner going through this. If you're convinced that loan terms and risks weren't fully disclosed to you, file a complaint with the Federal Trade Commision by calling (877)382-4357