If you fall more than a month or two behind on your mortgage payments, you can expect the bank to begin the foreclosure process. Throughout this process, the bank will reclaim possession of your home and make a judgement against you for the amount that you still owe on the mortgage. This situation forces a lot of people out of their homes and causes them to file for bankruptcy. So, if you are falling behind on your mortgage payments, what can you do to prevent foreclosure? To start, you can follow these five tips.
1. Talk to your lender.
People have a tendency to ignore the fact that they are behind on their mortgage -- perhaps because they are embarrassed or ashamed. But rest assured that you are not the first homeowner who has been in dire financial straights. It is perfectly fine -- and preferable -- to be in contact with your lender about your difficulties paying the mortgage. They may be able to adjust your due date, modify your payments, or make other changes to keep you out of the foreclosure pipeline. But without communication, you will never know if this is a possibility.
2. Prioritize your bills.
If you do not have enough money to pay all of your bills each month, sit down and try to prioritize your bills so that your mortgage at least gets paid. No, failing to pay your credit card bill or your car loan is not ideal, but it is better than being foreclosed on. First and foremost, make sure your family is fed. Then, pay the mortgage. Other bills can be withdrawn from your account after that.
3. Cut spending.
At first thought, you may surmise that there is nothing you can do about your spending. But if you actually take the time to sit down and go through the last month's statements, you may find items you can cut out. For instance, could you cancel Netflix, cable, and your coffee club subscription? If you did so and put the money towards your mortgage payment, could you make the payment? Talk with the other members of the family and see if everyone can cut one or two expenses every month. If you work together, you may free up a surprising amount of money.
4. Sell some things.
If you truly have no room in your budget and are in fear of losing your home, ask yourself if there is anything valuable you could sell in order to pay a few months' bills. Yes, selling your car might be a hassle and may mean you have to ride the bus to work for a while, but isn't it better than losing your home? Computers, video game systems, and even smartphones are other high-value items that you could do without if push came to shove.
5. Contact a foreclosure attorney.
This is a step you should definitely take regardless of whether you can also follow the tips above. Find a foreclosure attorney in your area, and schedule an appointment with them. They can work with your lender to formulate an agreement that will keep you out of foreclosure. Even if your lender refuses to amend payments when you call, they are likely to reach an agreement with your attorney. Your lawyer can also point you towards a financial advisor who can help you figure out how to best use your assets to navigate out of this nightmare situation.
Sitting on the brink of foreclosure is not a fun place to be, but if you can get up a little confidence and follow the advice above, you can keep the bank from taking your home.