How to Avoid Foreclosure

If you are panicking about how to avoid foreclosure, and are approaching a situation of where you can see that you won't be able to service your mortgage repayment, you really need to act quickly and consider all your options. Prevention is always better than cure.

Here are some suggested ways how to avoid foreclosure. Depending on your personal circumstances, you may find that one or a combination of some of these strategies will be enough to put you in a position to avoid foreclosure.

Increase your Income

This is a sure fire way to be able to service your mortgage if you are getting into difficulty. There are many different strategies you can adopt depending on your circumstances and abilities. The earlier you recognize your financial difficulties, the easier it will be to find ways to increase your income in time.

See Help for Foreclosure -Increase Your Income

Loan Modification

Typically loan modification involves extending the period of your existing mortgage, or changing it to an interest only mortgage, or reducing the interest rate on the mortgage. This can also provide some financial relief.

See Mortgage Loan Modification.

Sell Your House

If you are in the lucky position where you can sell your house for more than the value of your mortgage loan, you are still in a strong position.

In the case where there is no equity in your house, or you foresee that it may take longer to sell your house than the time you have available before defaulting on your mortgage, you may want to consider selling quickly for a reduced price.

A short sale is when you quickly sell your home for less than it is worth and less than the amount of your loan. This is preferable to foreclosure for a number of reasons, but also has some drawbacks.

See Real Estate Short Sale

Bankruptcy

Your options are Chapter 7 or Chapter 13 bankruptcy. Bankruptcy has drawbacks and advantages.

See Can Bankruptcy Stop Foreclosure?

Reduce your Lifestyle - Save Money

If there is any way that you can reduce your lifestyle to save costs, then this should be a serious consideration. The money you save can go towards your mortgage, or towards other strategies.

Refinance if possible

If there is available equity in your home, and you can get a better deal on a mortgage loan from another lender than what is offered on your existing loan, you can refinance to save money.

Sometimes, if the situation allows, you can even get a bigger loan, which you can sometimes use to buy yourself some time. This kind of mortgage refinancing has to be managed carefully in order to prevent you from leaping from the frying pan into the fire.

See How Does Refinancing Work?

Debt Consolidation

Debt consolidation involves combining all your debts into one at the lowest possible, most favorable interest rate. If you have a lot of credit card debt at a high interest rate, then this can save you a lot of money. Debt consolidation isn't for everyone, however. As well as the benefits of debt consolidation, there are significant disadvantages.

See Debt Consolidation and Reduction

Government Help

The Obama administration has introduced programs to help prevent foreclosure. These programs assist both the lender and borrower.

See Government Financial Help to Stop Foreclosure

Other Possible Financial Help to Stop Foreclosure

Possibilities include Housing Counseling Agency assistance; Refunding if you are insured with the VA; FHA insured mortgages may be able to get a once-off payment.

See Other Mortgage Assistance

Next  Expert Help to Stop Foreclosure

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