"Foreclosure”, what a terrible word for any homeowner to ever have to face. The very thought of losing one's home to foreclosure is absolutely horrifying and any of us would do whatever we possibly could to avoid the process altogether.

What is foreclosure, exactly? Legally, if a homeowner continually misses mortgage payments, the lender can take legal action (remedy) to repossess a property. This process is referred to as foreclosure and, if the process is executed to the fullest extent of the law, it means the homeowner will lose the house and all monies that have been invested in it. That's not all, Foreclosure can also completely cripple a homeowner's credit rating, sometimes preventing any future home loan opportunities. If possible, foreclosure should be avoided by any legal means available.

If you're having difficulty paying your mortgage, it is always best to communicate with your lender. One of my pet peeves, as a mortgage lender, is the lack of communication from payors or borrowers. Chances are, if you are currently facing foreclosure or the threat of foreclosure, your lender is the first place you should start. Your lender has a financial interest in your property and in you. So, contact your lender and also prepare a hardship letter.

Please see our mortgage modification hardship letter example on this hub for help preparing your hardship letter.

You might qualify for assistance or there may be other loan options better suited to your needs. Some alternatives to foreclosure include special repayment plans, temporary suspension of mortgage payments, and mortgage modification which seems to be a very popular alternative right now. These all depend upon your financial status and require you to furnish complete proof of both income and debt.

Another possibility is a pre-foreclosure sale. Pre-foreclosure sales can be tricky and you have to take care not to be taken for granted in this scenario. Most foreclosure vultures, as I refer to them, want you to sell your home for a lower amount than you have left on your mortgage. In this case, you will still owe the remainder of your mortgage loan; the only benefit I can see is that you will avoid foreclosure and save your credit rating. I do not approve of this method and, should you choose to sell your home in this fashion, I recommend not settling for less than what you owe, if at all possible.

Another alternative is to sell your home on a Lease With Option to Purchase (LWOP). Our family owned company, Dixson Financial, has been using this method to aquire and sell real estate for years because we are able to execute LWOP agreements rather quickly, offering immediate relief, providing the homeowner with immediate funds to catch up on any delinquent payments. In some cases, the LWOP can even result in a positive cash flow for the homeowner.

You can also advertise your Lease With Option to Purchase proposal in your local newspaper. An ad might look something like this:

Creative Financing! By owner

3br 2ba, lg, lot w/fenced yard.

Call Tom (xxx) xxx-xxxx

If none of these options works for you, you might be able to pay your lender (forfiet) the deed to your house in lieu of foreclosure. While you still lose your home, your credit rating will not suffer as greatly as if you went through a foreclosure.

It's always best to consult with an attorney or a real estate professional for the laws governing these types of real estate transactions in your area. We offer several forms related to Lease Options, credit screening, applications, hardship letters and other helpful free resources on our website: http://www.mycash4notes.com