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Avoid Foreclosure: Sell Your Home

By Clint Maher

There is one surefire way you can avoid foreclosure on your home: successfully close a sale on it before the foreclosure hearing. That's right! If you sell your home prior to legal action taken against you concerning foreclosure, then a foreclosure is no longer an option. Home ownership has changed from one party to another and likely your mortgage lender will be satisfied with the sale with the proceedings to pay off your debt. A sale of your home may not end all of your obligations, but it could be just what you need to avoid foreclosure.

If you are not able to make your mortgage payments, there are several actions you need to take right away. If you lost your job, became ill, or had any other unavoidable mishaps that prevent you from paying your mortgage, don’t ignore the situation. Open any mail that your mortgage lender may send you. You may be tempted to hope the situation will change or just go away, but the sooner you make realistic plans, the better off you and your credit rating will be. Call your mortgage lender. Explain your situation to the company. They may want some of your financial information, so be ready to share that information with your mortgage lender. Many mortgage lenders will be able to help you if you are honest about your situation. FHA, VA and HUD have advisors available to give you some counsel on what to do next. Be aware that you may still need to sell your house, depending on your situation.

Sometimes the lender can offer you a special forbearance. This means that the mortgage company can make arrangements to lower your payments make other arrangements to help you out, at least temporarily. The special forbearance is only a temporary method of avoiding foreclosure, however.

Another option that your lender may offer you could stretch out the time that you have to pay back the loan. This type of help from your lender is called mortgage modification. Partial claim is a term for another type of aid that helps avoid foreclosure. Your mortgage company may suspend the interest on the loan for a while. All of these options are only quick fixes for your problem, however. You still might need to sell your home and get out of the financial responsibility that you can no longer bear. To find out whether you qualify for any of these types of temporary fixes to keep your house, contact your mortgage company. You can also contact HUD, FHA, or VA for more information.

If you are two or three months behind on your mortgage then your mortgage lender could be hot on your case to make payments immediately or face foreclosure. The further you fall behind on mortgage payments, the closer a foreclosure hearing will be. You might want to consider a pre-foreclosure sale. There are specific requirements that you must meet in order to qualify for this help. Please check with your local realtor for more information. If your house payments are at least 2 months behind, your realtor may be able to help you with a pre-foreclosure sale.

To avoid foreclosure and the accompanying impact against your credit rating, you may want to consider selling your home to be freed from the important financial obligation of your house. Listing your home with a real estate broker who can help you find a buyer is important first step. Once a buyer steps forward and a bid has been received, you may want to consider the offer to get out from underneath your burden.

So, what happens if the buyer offers less than what you still owe on your mortgage? Well, if this is the case then you are still responsible for making up the shortfall to the mortgage company. I must tell you this: if you are in dire straits then you know that this shortfall may not be something you can take care of. On the other hand, you could file for personal bankruptcy which will adversely impact your credit rating.

As much as a sale of a home to prevent foreclosure isn't the best option, it could be your only option. Thus, even with a "short sale" whereby the buyer pays less for your home than what your home is worth it could be the only thing helping you to avoid foreclosure.

In some cases a mortgage lender may have to sign off on the "short sale" especially if there is a chance that you are upside down (owing money) on your mortgage. Short sale occur when you need to sell your property for much less than its purchase price. Also, short sale offers are not considered by the lender until a Notice of Default has been issued. If the sale is well below market price you can expect objections to be raised. On the other hand, if the sale is close to the asking price and your mortgage loan obligation has been satisfied, then you can expect the sale to go through without controversy.

If you are threatened by the foreclosure of your house, ask questions until you get an answer that you can handle. Some choose to abandon their house and loan altogether. You can be sure that the mortgage company will catch up with you eventually. Abandoning your house is not an option for both financial and ethical reasons. Be honest with your lender. Also, your local realtor can help you sell your home for the best price. If you can sell your home, both you and your mortgage company will be much happier. By following good advice, you can keep a bad situation from turning into a disaster.