Foreclosure: What Can I Do to Prevent It?

Many homeowners found themselves losing their homes because of rising interest rates on adjustable mortgage rates. Losing your home to foreclosure is devastating but it is not always necessary to allow your home to fall into a foreclosure situation.

According to Real Estate Wiki the first rule is to find ways you can pay the mortgage payment. If your payment is too high because the interest rates went up under the terms of an adjustable rate mortgage, you have the option of negotiating with your lender to arrive at a mutually agreeable payment plan, which would avoid foreclosure. Most lenders would much prefer avoiding the foreclosure process. 

With this fact in mind, you can change the negotiation to your favor. If you can show an effort to make at least 60% of the house payment, it may be possible to negotiate the payment down to your needs in order to avoid foreclosure. Another way you can avoid foreclosure is by negotiating with your lender to complete a short sale. 

A short sale, according to Real Estate Wiki, is when there is not enough equity in the house to cover the mortgage that is due. In other words, you're short on cash. A couple of things can happen. First, the mortgage company may allow the seller to close on the home but still owe the difference after closing. The good news is the lien against the property will be removed. The bad news is the debt is still owed. Secondly, the mortgage company may simply remove the lien and forgive the debt. Finally, the mortgage company may demand the payment in full before they remove the lien. In other words, unless the seller brings the necessary funds to closing clear title can't be transferred and the closing will not continue.

Your credit score will suffer a more substantial hit by undergoing foreclosure or giving a deed-in-lieu of foreclosure than with a short sale.  Under a short sale, the borrower negotiates with the lender and the short sale process is completed in accordance between the two parties. 

Experts agree that a short sale may result in a loss of about 100 points on the borrowers FICO score. On the other hand, a foreclosure or deed-in-lieu of foreclosure could result in a loss of in the area of 250 points of more.

For more free information on the home selling and buying process visit www.RealEstateWiki.com.