How to Stop a Foreclosure That Is Active

All of us run into financial problems occasionally, even to the extent of not being able to make the monthly payment on the mortgage. After a few months of harassing telephone calls from your lender, he finally decides to foreclose on your house. You have two choices. The first is to quietly move from your home; the second is to find a way to stop the foreclosure. Read on if you or anyone you know is faced with that problem.

Instructions

1

Try refinancing your house or taking out a home equity loan. If you have been paying on your mortgage for a few years, you have paid down some of the principal of the loan and your house may have also increased in value. You can use that equity to pay what you owe in missed payments. If you decide to refinance your house, and the interest rate on your new loan is lower than your current loan, you could have the added bonus of a reduced payment.

2

Talk with your lender about ways to change the terms of your current mortgage. Lenders lend money, and they are not in the real estate sales business, so most lenders will go the extra mile to get you back on track. For example, he might require only interest payments until you are back on your financial feet. Or he may take the payments that you've missed and tack them onto the end of your loan, making you current. Or he might extend the maturity of your loan, which will reduce your future monthly payments. In most cases, lenders will bring your loan back to its original form once you have solved your financial problems.

3

Put your house on the market if none of these solutions is possible. Depending on the state of the real estate market, you may be able to sell your home for enough to satisfy your mortgage debt. By doing so, you will probably do less damage to your credit rating than if you allowed the foreclosure to proceed. That's true, of course, if you got in touch with your lender when your financial problems first started.

4

Declare Chapter 7 bankruptcy, but do your homework before doing so. First, several states exempt your primary residence from the bankruptcy. Also, look into alternative solutions like borrowing money from friends or family, because filing for bankruptcy will have a serious negative effect on your credit rating, which will make it very difficult to borrow money in the future.