Early Warning Signs and Prevention Tips for Foreclosures

By: N Greene

The best way to deal with a foreclosure is to meet the problem head on. If you are worried that you may be at risk for losing your home, there are several early warning signs that you should pay attention to in order to avoid falling into this trap. In addition, there are methods that you can employ early on to help you prevent a foreclosure from occurring. We've listed three early warning signs along with prevention tips for each situation.

Warning Sign #1 - Loss of income
In the event that you are facing either a lay off or a reduction in your income that will affect your financial condition, you may not be able to make your mortgage payments on time.

Prevention Tip #1 - Refinance your mortgage
The minute that you find out that this will be happening, contact your loan officer at the bank. Present them with the problem that you are facing and see if they will be willing to refinance your current loan so that you can get lower payments. Banks do not want to foreclose on your property and most will be willing to work with you on finding ways to lower your payments so that you are able to continue to make your payments. Explore this option before you miss a payment because it will be harder to qualify for refinancing if you are already late on your payments.

Warning Sign #2 - Missed one payment
While at first it may not seem like a big deal, by the second month, you may have even more problems trying to make up what you missed. It can get harder and harder to keep up once that first payment is missed.

Prevention Tip #2 - Discuss workout plans with your lender
Contact your lender immediately and explain your situation. Your lender will help you to workout a plan to address whatever difficulties you are experiencing. Many people make the mistake of ignoring attempts by the lender to contact them and this is the worst thing that you can do at this time. The sooner you contact your lender, the more options that will be available to you.

Warning Sign #3 - Missed at least four payments
When you fall seriously behind on your mortgage payments, this is the number one sign that a bank will be ready to foreclose on your home. If you are having no luck making any extra money, it can seem like a foregone conclusion that you will lose your home. However, there is light at the end of the tunnel.

Prevention Tip #3 - Apply for a Partial Claim FHA loan
The U.S. Department of Housing and Urban Development offers loans to homeowners with FHA loans who are at least four months behind. They will pay off what you owe your bank to bring you current and then you will need to sign a promissory note and agree to have a lien placed on your home. This loan is interest free and will not need to be paid back until you have either completed your mortgage payments or sold your home. This is a fast way to get help getting back on your feet and avoid an imminent foreclosure. Your bank loan officer will be able to assist you in getting this loan from the government.

Foreclosures
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