Financial Reflections

Your first and best steps to avoid foreclosure happen when you purchase a home. Be a wise mortgage buyer. If you weren’t prepared to financially deal with unplanned circumstances, you may now be looking up foreclosure information.

When you a home, make sure you can afford the payments to begin with. That sounds simple, but today’s foreclosures in the news are a strong reminder of how easy it is to get in over one’s head.

Your down payment should not use up all your savings or investments. You will need that in the event something happens and your income changes. A rule of thumb-you should have enough in saving to cover all expenses for three months. If you don’t, maybe you should postpone buying a home so you don’t end up looking for ways to avoid foreclosure when there is a layoff where you work or an injury or illness prevent you from working.

No matter what the reason you are looking for ways to avoid foreclosure, there are some things you can do to protect your home from a foreclosure auction.

• Be in contact with your lender. They don’t want to deal with foreclosure any more than you do. When foreclosures are on the rise, they are even more motivated to work with you.
• Don’t get more than 3 months behind. Of course your mortgage company may be different, but usually it is during the forth month that foreclosure proceedings and the costs involved will occur.
• When making out payment arrangements, lenders will want $500-$700 of your income left over each month AFTER all your expenses are paid.
• Temporarily get a second job to catch up. This can also help with payment arrangements being accepted.
• Get financial counseling from a reputable and proven agency
• Check into the possibility of refinancing
• Research bankruptcy if you have no other options available
• Consolidate debt and reduce it so there is more money available towards mortgage payments
• See if a personal loan from a friend or relative is available (fill out a promissory note)
• Sell items that aren’t needed (you can buy new ones when your finances improve)

The important thing when looking into ways to avoid foreclosure is to research all your options. Do not fall prey to predatory lenders who will take advantage you in your vulnerable financial position. It is not worth being saved now to only end up with the same or worse financial problems down the road.

Once you have protected your home from foreclosure, evaluate the events that put you in a position to nearly loose your home. Once you found ways to avoid foreclosure, find ways to become financially secure. Look for ways you can cut back and build a savings account or have money to invest for your future. It may be embarrassing to get into a financial position that there is a possibility of foreclosure, but the second time around could be worse…it is best to avoid it all together and learn from your mistakes.