1. Make a careful budget.
It’s easier said than done, but the most straightforward way to preventing foreclosure is to restructure your spending to stay current on your payments. See if you can cut things like TV, memberships, eating out, or entertainment. Hold off on paying down credit cards and other debt until you have paid your mortgage.
2. Don’t procrastinate.
The further you fall behind, the harder it will be to reinstate your loan and the more likely that you will lose your house.
3. Don’t ignore your lender, respond to their notices.
It may forestall having to make tough decisions, but don’t put your head in the sand. The notices you receive will contain important notices of pending legal action.
4. As soon as you realize you’re behind on payments, contact your lender.
Lenders want cash, they don’t want to get stuck with your property. They will bend over backwards to get you back on track, it’s better for their bottom line.
5. Stay informed on your rights.
Read your loan documents so that you know the consequences of not making payment.
6. Consider liquidating and making use of extra assets.
If you have extra assets such as a second car, jewelry, or a life insurance policy, you can sell these for cash to help reinstate your loan. It may not get you out of the red, but at least it will show your lender that you are acting in good faith.
7. Avoid foreclosure prevention companies.
Don’t pay unnecessary fees for foreclosure prevention assistance–use that money to pay off your mortgage. There’s a million for-profit companies will contact you promising to negotiate with your lender. If this is the only service the company offers, then it isn’t worth it. A company like Big State will perform this service for free.
8. Work with someone you can trust.
Housing counselors can help you understand the law and your options, organize your finances and represent you in negotiations with your lender. There is a lot of good advice out there, you just have to take it.