Save my Home - Mortgage Default and Foreclosure Help

When a person starts falling behind on their mortgage and are facing foreclosure proceeding, confusion and bad decisions seem to take over. Knowing the process can help you make better decisions!

1. You're in Trouble

You may have recently lost your job or fallen ill -- and now you're behind in your mortgage payments.

Answer - Look at unlike reserves (cashing CD, borrower against your life insurance, sell unused items).

2. Missing Payments

The 30-day late notice has arrived.

Answer - Discuss a forebearance plan. This is nothing more than a special payment plan that you and the bank can setup.

Answer - Think about refinancing with a longer term. This come reduce your monthly payment, but will increase the duration.

3. Discussions are no longer an option --After 90 days banks and lender are less likely to offer forebearanc and refinancing options.

Answer - Once you receive a NOD (Notice of Default) you must appear in court where another opportunity to save your home by offering some type of payment. These payment are also called "partial claims" which allows you the mortgagee to advance funds to the bank in the form of a promissory note. Keep in mind, you must be within 12 months delinquence.

4. Your home is up for auction.

Answer - If there are no buyers for your home the bank will take ownership or another option is a deed in lieu. A deed in lieu allows you the mortgagee to sell you home back to the lender that financed the mortgage. You won't save your home, but it can help your credit.

If you're falling behind on your mortgage payments here are some tips:

1. Don't ignore the problem and the notices. If you do nothing if will be harder to reinstate your loan.
2. Call your lender before they call you and try to work out some type of payment arrangement.
3. Respond to any and all correspondence from your lender.
4. Get up-to-date "Mortgage Rights" information on the laws in your state. Also compile your loan documents and go over the fine print.
5. Go to the FHA website to gain understanding on forclosure prevention options. You can also call for assistance at (800) 569-4287.
6. As indicated above, contact your local HUD-approved housing counselor.
7. Put yourself on a budget and start prioritized your spending.
8. Sell some assests.
9. Watch out for spams -- avoid foeclosure prevention companies that charge heavy fees.
10. Don't believe any company that claims include stoping your foreclosure immediately.

The first things you should do to rebuild bad credit is -- clear it up. Try paying off and negotiating past due balance on your credit report. Although a foreclosure can not be removed from you credit score, cleaning up other negative items can only help.

Start the clean up process by focusing on those items with the highest credit balances, and get yourself on a budget.

Your budget should help you maintain your existing accounts while paying down those outstanding balances. If by chance, you need a credit card use a secured card until you are back on your feet.

If your mortgage payments are back on track -- try a biweekly payment systems. This will increase the amount of equity in your home at a faster rate, and you will be paying less interest.