Top 5 Loan Modification Tips to Avoid Foreclosure
Avoiding foreclosure is a serious concern for millions of American homeowners. There is a lot of advice on methods to avoid losing your home when you are in financial difficulties. The Obama administration has an arsenal of loan modification programs, alternative foreclosure programs, forbearance periods for the unemployed programs and the list goes on and on. However, as it has been widely advertized, these programs have not obtained the results hoped. So what are the best options for a troubled borrower?
1) Do not ignore the problem. A big issue with many homeowners is that they ignore their financial problems until it is too late. This ostrich syndrome of hiding our heads when we are in trouble is natural, but financially very dangerous. It is important to act straight away as soon as you realize you are going to be behind in your mortgage payments. The sooner you act the more options you have.
2) Know your rights. Before you contact your creditors (and you should do that as soon as possible) look into your rights as a borrower. Read your loan documents carefully and refresh your memory on what your lender can do if you do not make payments. Review your state laws on foreclosure. Every state has different foreclosure laws and timeframes.
3) Contact your lender as soon as possible. Did we already say that? I’ll say it again, contact your lenders. They are interested in finding a solution and providing you with a workout so you can continue paying your loan. There are many options to consider: forbearance periods, reinstatements, loan modifications, deed-in-lieu, refinancing… It all depends on your personal circumstances.
4) Contact a legitimate housing counselor. Non-profit organizations sponsored by the government are ready to give you personalized advice. Call (800) 569-4287 and find one near you.
5) Avoid foreclosure prevention companies. Some of them can help, but the bottom line is that you do not need to pay for these services. Unless you believe loan modification programs are part of a government conspiracy to take your home from you, why pay for a service the government provides for free. On the other hand, unscrupulous loan modification agencies and lenders can cause further damage to your financial situation.
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