Tuesday, July 22, 2008

Prevent Foreclosure And Save The Pains Of Losing Your Home

By Sean Roberts

Just thinking about losing your home to foreclosure can be enough to cause most people a lot of anxiety. Imagine then just how painful it would be if you actually lost your home due to a foreclosure. There are fortunately more ways than one to prevent foreclosure proceedings even in these troubled economic times.

Forget about all the things that you read in the paper or have seen on TV about the inevitability of foreclosure. If you really want to prevent foreclosure and save your home, you have to think positively and actively find ways to prevent foreclose instead of just wallowing in despair.

Contact Your Creditors and Talk to Them

The best way to prevent foreclosure is to explain your financial situation to your creditors as best you can and ask for their help. When you receive that much dreaded collection letter from your creditors, do not run or hide. If you hide, these people have ways of finding you and foreclose on your home. Do not even bother to hide from them.

Rather than hiding from the situation, face it. Explain your troubles to the creditors and, if they should ask to see your current financial records, do not hesitate to give them copies. Your creditors will be more willing to help you and give you a chance to keep your home if you are more cooperative with them.

Inquire About Special Forbearances

Consider asking for a special forbearance to prevent foreclosure when you talk to your lender or creditor. A forbearance is a special agreement to postpone any pending action. Some special forbearances will allow you time to arrange for a payment plan that is compatible with your budget. Usually when you ask the bank or financial institution for special forbearance, they will ask you to prepare an income and expense statement showing what you can afford to pay for your home mortgage. A representative of the bank or other lender will review your statement and then ask which expense items you can eliminate in order to free up additional capital to pay your debts. The representative may ask you for a plan on how you may be able to increase your income in the near future.

Try Asking for a Modification to Your Mortgage

Aside from asking for special forbearance to prevent foreclosure, you may also prevent foreclosure by asking for mortgage modification or refinancing. Refinancing your loan can help you get better terms and conditions of payments. In most cases, when you refinance your loans, your creditors will extend the term of payment and reduce the monthly amortization of your loans.

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