Early action is key. Few people wake up to find that their home is in foreclosure. There are always warning signs that precede the event. Being aware of these warning signs and taking fast, decisive action early on can mean the difference between keeping your home and losing it.



As soon as you know that you are going to miss a house payment, contact the lender. Contacting the lender early on allows the lender to help you work out alternatives. The truth is most banks do not want to take your home. They do not want the hassle of foreclosing, maintaining, and then selling the home. They would much prefer that some arrangement be worked out, but this often requires your early contact with them.

You should always follow up a phone call with a letter. You can draft a hardship letter and send it to your lender. This is not a good time to be too creative. Be specific about what caused the payment delinquency, make it detailed and be honest, but also be concise.

Do not accept a short sale unless you absolutely have no other choice. A short sale is when the bank or lender agrees to sell your home for less than what you owe. The difference between the selling price and the amount you owe will still need to be made up by you, and, of course, you will lose the home in the process.

You will find that being polite and patient with lenders will go a long way. There are many solutions that a lender can offer you. These might include extending the repayment period, suspending payments for a few months, or tacking the missed payments onto the back end of the loan.

You may also want to talk to your lender about extending the contract. For example, if you have a 30-year fixed rate loan, perhaps you can change it to a 40-year loan. Not all lenders will be willing to do this, but it is certainly worth asking about as the difference in the payment amounts can be the difference between keeping the home and losing it.

Refinancing, in general, is also a common option but homeowners should understand that refinancing is much easier to get when the housing market is moving up and less easy to get when the market is moving downwards.

Another option for some homeowners is bankruptcy. This is an option that must be decided on based on the advice of an attorney. Not all homeowners can find relief from the bankruptcy court. For this reason, you must speak with an experienced attorney who can fill you in on the details and whether or not your home can be protected.

Avoiding foreclosure is not always easy and it can be very stressful, but do keep in mind that foreclosure will remain on your credit record for seven years. It may be up to four years after a foreclosure that you will be approved for regular interest rates again. These are just a few of the reasons that you should work as hard as possible to avoid foreclosure.