How to Keep Your Home When Financial Problems Arise

There are a number of options for keeping your home when financial problems arise, but it is important to stay in touch with your mortgage company and honestly explain your situation. Some homeowners make the mistake of remaining silent about their problems until foreclosure is imminent. By then the homeowner may have fallen behind by several mortgage payments and is battling other financial problems as well. A lack of flexibility at that point could make it impossible to prevent a foreclosure.

Instructions

1

Contact your lender about a special hardship program called forbearance. Take this step before you're on the verge of missing mortgage payments. Forbearance allows you to skip several mortgage payments without penalty while you work through temporary problems such as a job layoff or a brief illness. Bank of America reports that forbearance agreements usually last for about three months.

2

Make an appointment with a housing counselor certified by the U.S. Department of Housing and Urban Development. Counselors are available nationwide, and they can inform you of other programs you may qualify for. For example, in 2011, the U.S. government offered the Home Affordable Unemployment Program, which allowed homeowners to miss up to three mortgage payments without penalty while looking for work. However, getting into the program at the start of your problems is essential. Locate a housing counselor in your area by seeking a referral from a local charity such as the United Way.

3

Contact all other creditors to explain your situation, and ask for reduced monthly payments for as long as possible. Credit card companies, for example, may agree to slash your minimum monthly payments, although they are not obligated to do so.

4

Slash discretionary spending on things such as cable television, hobbies, eating out and traveling. Sell a second car that is paid for to raise money for mortgage payments.

5

Schedule free consultations with bankruptcy attorneys if you have excessive debt beyond your mortgage payments. Consider bankruptcy a last option for avoiding foreclosure. Meeting with bankruptcy attorneys allows you to learn about the process before you get to that point. Bankruptcy won't end your mortgage problems, but it can eliminate other debts, and, in some cases, it can allow you to keep your home.