The Reality of Foreclosure: How To Avoid Foreclosure Fast

Failure to to make your home mortgage payments within a specified time frame, foreclosure is on its way. Foreclosure is the legal process where your lender can use to repossess (take over) your home. If that ever happens, it is inevitable for you to move out or get evicted. However, if your property is worth less than the total amount you owe on your mortgage loan, a deficiency judgment could be pursued. Facing foreclosure nonetheless, you not only lose your home, you also would owe your lender an additional amount.

Both foreclosures and deficiency judgments could seriously affect your ability to qualify for credit in the future. Below are some tips on avoiding foreclosure.

1. Accept the fact and don't ignore the issue Acceptance is the key. You should check how much you owe with your mortgage payments. Always ask the lender about the timeline of the process so you can act fast on preventing them to foreclose your house! The further behind you become, the harder it will be to reinstate your loan and the more likely that you will lose your house.

2. Contact your lender as soon as you realize that you have a problem. Lenders do not want your house. They have options to help borrowers through difficult financial times. It is better to consult them rather than avoid them. You might be surprised how they can help you at times like this.

3. Open and respond to all mail from your lender. Don't avoid any correspondence or notices sent to you. As earlier said, it is better to face the problem rather than to avoid it and lose the opportunity to remedy the issue.

The first notices you receive will offer good information about foreclosure prevention options that can help you weather financial problems. Later mail may include important notice of pending legal action. Your failure to open the mail will not be an excuse in foreclosure court.

4. Know and be ready to exercise your mortgage rights. Search and ready your loan documents. And whether you like it or not, you must read and understand your mortgage policy. Knowing what they can do when you fail to make your payments is always good. Most importantly, learn about the foreclosure laws and time-frames in your state (as every state is different) by contacting the State Government Housing Office.

5. Understand foreclosure prevention options online or consult a lawyer. Valuable information about foreclosure prevention (also called loss mitigation) options can be found on the internet at www.fha.gov/foreclosure/index.cfm.

6. Prioritize your spending now! After healthcare, keeping your house should be your first priority.  Review your finances and see where you can cut spending in order to make your mortgage payment. Look for optional expenses-cable TV, memberships, entertainment-that you can eliminate. Delay payments on credit cards and other "unsecured" debt until you have paid your mortgage.

7. Maximize your assets. Now is the time to use your assets - such as a second car, jewelry, a whole life insurance policy -- that you can sell for cash to help reinstate your loan. Can anyone in your household get an extra job to bring in additional income? Even if these efforts don't significantly increase your available cash or your income, they demonstrate to your lender that you are willing to make sacrifices to keep your home.

8. The Best Solution: Go with A Short-Sale A short sale is a transaction in which the lender, or lenders, agree to accept less than the mortgage amount owed by the current homeowner. More often, short-sale is practice wherein the difference is forgiven by the lender, and in others the homeowner must make arrangements with the lender to settle the remainder of the debt.

Since a short sale generally costs the lender less than a foreclosure, it can be a viable way for a lender to minimize its losses.

A short sale can also be the best option for a homeowners who are “upside down” on mortgages because a short sale may not hurt their credit history as much as a foreclosure.

As a result, homeowners may qualify for another mortgage sooner once they get back on their feet financially.

One of the easiest way to resort into short sale as a solution to avoid foreclosure is to sell your house with a direct cash buyer or investor. With a direct cash buyer, you could completely avoid the foreclosure process and earn a fair offer for your property.