Even the word “foreclosure” may be enough to tie your stomach in knots. The truth is, it's a difficult and often painful process – but ignoring the signs will not make it go away. In fact, it's in your best interest to act quickly if you hope to avoid foreclosure. So, if you're facing foreclosure, what should you do?
1. Talk to your lender
Don't wait until you've missed a couple of mortgage payments and don't wait until the lender calls you. Set your pride aside and call your lender as soon as you know you can't make a payment. Your lender does not want to own your home. The paperwork that goes along with a foreclosure, as well as the costs of marketing your property, will cost the bank thousands of dollars.
Your lender would rather work with you than foreclose on your home. Call and ask about your options, including forbearance, reinstatement, payment plans or loan modifications. If what they tell you seems complicated, ask them to break it down into simpler terms. You must fully understand what's happening so you can make a sound decision.
2. Contact foreclosure relief programs
The Department of Housing and Urban Development's Federal Housing Administration has a website that provides advice to consumers facing foreclosure. Check the site to see if you might be eligible for loan balance reduction or refinancing. Many state government agencies also have free hotlines to help consumers facing foreclosure. Also, check out Zillow's page on refinancing options for underwater borrowers.
3. Get counseling
Credit counseling services can negotiate with your lender to help alleviate your debt. In most major cities, HUD-sanctioned housing credit counselors are also available to talk to homeowners about their options during foreclosure.
Be wary, though. Some counseling services are not on the up-and-up. Check with your local Better Business Bureau to determine whether the company is fraudulent. And don't sign anything without consulting your attorney.
4. Time for a gut check
Can you honestly afford to keep this house? It really may be in your best interest to sell and start over. Each person's situation is different; talk to a trustworthy financial adviser about your circumstances. Be truthful – whether you're talking to your financial adviser, lender or credit counseling service. Their advice will only be valid if it's based on real numbers and facts.
5. Organize your debt
Prioritize your bills. Alert your utility and credit card companies and make them aware of your financial crisis. If you’ve lost your job but are busy interviewing for a new one, let them know that. Do not write bad checks in an effort to postpone disconnect notices. Late fees and bounced check fees will only add to your troubles.
Whatever you do, take action. Doing nothing will make a bad situation worse. Be proactive, and you may be able to avoid foreclosure and save your home.
Roman Lopez is the owner of The Roman Lopez Real Estate Team, a full service real estate company specializing in Greater Austin home sales, purchases, and investments properties.
Roman has worked and excelled in the real estate business in Austin, TX for the last 7 years. Roman's real estate career started in 2008 where he was named Rookie of the Year for the KB Home Central Texas Division.
After a successful career with KB Home, Roman obtained his real estate licence and joined Keller Williams Realty where he again rose to the top and won Rookie of the Year for Keller Williams Austin.
After a year as a solo agent he built a team of top producing agent, The Roman Lopez Real Estate Team. His team now ranks as one of Keller Williams top teams closing over 200+ residential sales transactions per year.
Roman's designations include: Certified Negotiation Expert, Certified Distressed Property Expert, Certified International Property Expert, Certified International Property Expert, and Global Property Specialist.
Roman's Awards: Keller Williams Austin Rookie of the Year 2011, 2008 KB Home Rookie of the Year Central Texas Division, 2015 Platinum Top 50 Winner, Platinum Top 50 Finalist, 2014 NAHREP Top 250 Latino Agent in the US, 2014 NAHREP Top 20 Latino Agent in Austin, 32015 NAHREP Top 250 Latino Agent in the US, 2015 NAHREP Top 20 Latino Agent in Austin, 2015 Best of Angie's List, 2015 Real Trends Best Real Estate Agents, 2014 Best of Trulia Best Real Estate Agents
If it's your first time buying or selling real estate, you don't know
"My agent Roman Lopez was very helpful throughout the whole process. I was given a good idea of my market beforehand and a good strategy on how to present my house. After I got under contract I was given timely information until the contract was executed."