One of the worst experiences to go through can be a foreclosure. It's stressful, can ruin your credit, and is a financial nightmare.
Losing your home by way of foreclosure can also cause embarrassment as its made public that you failed to pay a debt.
Foreclosures make it incredibly difficult to purchase a home in the future as well. Nobody buys a home with the goal of going through foreclosure, so when it happens it can be intimidating and most people are not prepared for it. Luckily there are ways to stop foreclosure.
One way to help prevent the foreclosure process from the start is to notify your lender if you feel you are in danger of missing your mortgage payment.
This will help to delay the bank from issuing a Notice of Default against the home owner.
If you contact the bank ahead of time and let them know your situation they may be a little understanding. Just like you, they also don't want to foreclose on your home.
The bank may present you with one of these options:
Back in 2009, the government partnered up with banks and other financial institutions and started the Making Home Affordable program to help struggling home owners avoid foreclosure. These series of programs included loan modification programs to help home owners get caught up on their payments.
By restructuring mortgages, the goal was to help decrease some interest rates or spread loans over a longer period time to decrease monthly mortgage payments. The Home Affordable Modification Program (HAMP) is one of the most popular efforts to help stop foreclosure.
The aim of HAMP is to reduce mortgage payments to 31% of home owner's gross monthly income. Just like all government programs, HAMP is not available for everyone. You have to meet certain qualifications such as proof that you are going through a financial hardship such as divorce, unemployment, or medical issues.
So as you can see, if you're struggling to make your mortgage payments, foreclosure is not a necessity and there are ways to stop it. You'll want to exhaust all of your options before even considering foreclosure because the damage it does to your credit is very difficult to repair and causes a lot of people to eventually file bankruptcy.
Look into government programs, foreclosure alternatives, and keep in contact with your lender and you may be able to stop foreclosure.