6 Tips to Prevent Foreclosure
Recently on the PropertyLark Blog, we shared an article entitled “4 Ways to Avoid Foreclosure.” In it, we talked about options to consider when foreclosure on your home seems imminent. An example of this is when you might have already gotten a foreclosure or pre-foreclosure notice from your bank or lender.
Today, we want to talk more about how to prevent foreclosure altogether. You may be struggling financially or starting to fall behind on mortgage payments. You are not quite at the point of desperation yet, but you know you can’t continue down your current path. This is a common scenario for Americans who may have built up other high-interest debts like car loans and credit cards, or maybe they lost a job recently and are worried about how it it will impact their homeownership. Another common scenario is people who are living month to month. They are getting by, but any unexpected financial hurdle could be devastating.
If you are worried about your financial future and fear that foreclosure may be on the horizon, here are some steps you can take to prevent foreclosure before it is too late:
1. Organize Your Home
We’re not just talking about cleaning up the clutter, though you do want to keep up with maintenance and repairs. Taking good care of the home will keep you motivated not to lose it and could be beneficial if the bank comes threatening with a foreclosure notice. In addition, you want to keep all your homeownership documentation together and well organized. Keep a folder or lockbox with important paperwork. Good organization will help you be more responsible financially and may allow you to better explore your options if foreclosure starts to become a possibility.
2. Do Your Research
Your title deed and mortgage loan are legally binding documents. You have rights as a homeowner and borrower, but the lender also has legal power if you aren’t making payments. Understand the legal aspects of your homeownership, research your options and be prepared to fight for your rights.
3. Seek Legal Advice
As an extension of tip #2, you may also want to seek legal advice from an attorney who understands real estate and mortgage law. Get professional help and guidance early on and do what you can to prevent foreclosure from happening.
4. Get Your Finances in Order
A huge step you can take if you are worried about keeping your home is to start getting your finances in order. It’s never too late to be more responsible and improve your financial standing. Carefully review your monthly income and expenditures. Cut out unnecessary expenses. Make sure you are making monthly mortgage payments. Pay down debts as much as you can. The best way to prevent foreclosure is to become a more financially responsible homeowner. If you are making your payments each month and not falling behind, you will never have to worry about foreclosure!
5. Avoid Building Up More Debt
Some homeowners worried about foreclosure will take out a personal loan or a second mortgage to try and get by. Or, they put other living expenses on credit cards in order to apply all their income toward mortgage payments. All you are doing in this situation is building more debt and digging a deeper hole that will eventually crash in on you.
6. Sell Your House Before it Becomes Too Much of a Burden
Rather than building up more debt or scraping to get by, another great way to avoid foreclosure is to sell your house now. If it’s a struggle to make your monthly mortgage payments, then you probably own more home than you can afford. You may have the option to sell it soon and get what you can out of it. Then, you can move to a more affordable place as you work to keep improving your financial situation. A preemptive sale may help avoid knocks on your credit score and other stigma that come with a foreclosure or short sale.
Do what you can to prevent foreclosure. Take preventative measures to understand your financial situation and improve it. If keeping your home isn’t a realistic option, then selling it may be the right decision.
If you are thinking about selling your house for any reason, you can get a no-obligation fair cash offer from PropertyLark within 24 hours. Just fill out the contact form on any page of our website to get started!