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Avoiding the Most Common Foreclosure Pitfalls

At one time foreclosure was something that relatively few people had to worry about. In light of the current economy; however, an increasing number of people have found themselves either concerned about foreclosure or actually facing the risk of losing their home. Therefore, it is important to learn what you can do to protect yourself from the risk of foreclosure as well as what you should do if you find yourself facing a potential foreclosure.

First, it is important to get in the habit of saving up for a rainy day or emergencies. One of the most common mistakes that many people make is not having a solid plan in place for emergencies through savings. In today’s economy, if you should be laid off, reality dictates that it could take some time before you find another job. If that happens, you need to be prepared to cover your expenses, including your mortgage, with savings.

In addition, you need to make certain that you never miss even so much as a single month on your mortgage payments. Keep in mind that skipping even one month can greatly affect your credit and can also cause your lender to scrutinize future loan applications even more seriously. That can put you at greater risk for being rejected for any future mortgage applications.

If you find yourself in a dire situation where you are not able to meet all of your monthly financial obligations, one of the worst things you can do is to ignore your lender. Realize that it really is in the best interest of your lender to assist you so they can continue to receive payments on a regular basis. Banks do not want to foreclose on mortgage loans. It is time consuming and costly for them. The would much rather assist you in getting back on your feet and keeping those mortgage payments rolling in, but they cannot do that if you ignore them. Ignoring the situation will not improve it. It is far better to go ahead and face up to the situation and discuss it with your lender to find out if there are any options available that may be able to assist you.

In the event that you have missed one or two payments, avoid the temptation to avoid paying subsequent payments. The best thing you can do at this point is to pay whatever you are able. This will help to justify to the bank that you are at least trying to back pay what you owe as you can and that it is not your intention to turn your back on your financial obligations.

If your situation turns really dire, do not fall for foreclosure prevention services that are often targeted at homeowners in trouble. The fees for such services can easily reach into the thousands and can sometimes still even result in the loss of your home. Basically, all such services do is contact your bank on your behalf and make a request for a loan modification. This is something you can do on your own without anyone acting as an intermediary and certainly without paying thousands of dollars.

With that said do not ignore the opportunity to take advantage of resources and programs available through the government. Homeowners who find they are no longer able to afford their mortgage as the result of an adjustable rate mortgage being reset as well as homeowners with interest only loans may be able to benefit from a program available from the Federal Housing Administration.

If your lender begins the foreclosure process, do not ignore the situation and ignore deadlines that are established. While bankruptcy is not an ideal situation, you may need to consider it as an option. Consider consulting a financial expert to determine whether bankruptcy could possibly assist you. Depending on the state in which you live, the amount of time left once the foreclosure process has been started can vary from as long as several months to as little as a few weeks.

The first moment you realize you are in trouble with your mortgage you need to take steps to address the problem. Ignoring the situation will only make it worse and could result in diminishing the options that are available to you which could actually help you to avoid the loss of your home. Take the time to explore all of the options that are available to you before you face the risk of losing your home and having a black mark placed on your credit that will haunt you for years into the future.



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