An unfortunate consequence of today's economy and housing market has been a drastic increase in foreclosures. Many homeowners are struggling to cope with balloon mortgages that suddenly increase and outside economic pressures like layoffs and cutbacks. If this sounds like you, here are some tips to help you avoid mortgage foreclosure.
Tight Budgeting In Tough Times
If you are not yet behind on payments but just frightened about falling behind in the future then establishing a strict budget can help you stretch your money and buy some time to improve your finances.
Here are some ways to cut monthly costs during rough economic times:
* Eliminate unnecessary monthly expenses - Cable, cell phones, subscriptions and other unnecessary monthly costs can add up to cost you hundreds each month. If it's not critical for survival, can it!
* Eat In, Not Out - Cooking at home instead of going out to eat can save money especially when you consider the leftovers as lunch for the next day.
* Raise Deductibles on Auto Insurance - Assuming you are a safe driver, increasing the deductible on your auto insurance or canceling benefits you don't need can save money each month.
* Budget Plans With Utilities - Many utility companies offer budget plans and/or hardship programs. Consider the options to see if you can save each month on your utility bill.
* Consider Debt Reduction - If you are struggling as the result of credit cards or other unsecured loans, it may be a good time to consider a debt reduction program to help save on monthly bills.
There are many other ways that you can save money each month, often on things that you won't even miss. The average household wastes quite a bit on luxuries, but in times like these cutting back on what you don't absolutely require can help you get through financial rough spots.
Talk to Your Lender At The First Signs of Trouble
When you anticipate having trouble paying next month's mortgage payment, you should pick up the phone and communicate your situation with your lender. Many homeowners are pleasantly surprised at how willing the bank is to work with you in times of hardship. From a dollars and cents perspective, it is in the banks interest for you to avoid foreclosure. This common goal makes for the possibility of finding a solution that keeps both parties happy.
Approaching your lender early is very important because it leaves opent the widest variety of potential solutions. As time goes on and foreclosure looms closer, opportunities close leaving you with fewer options.
There are several popular programs and solutions that the bank may agree to, including. . .
* Refinance - Refinancing a ARM mortgage in to a fixed rate is quite common, however it only works if you have some equity already in your home. Folks that bought at the peak of the housing prices only later to see the value of their home fall will have a harder time finding a lender willing to refinance.
* Forbearance - This option temporarily suspends payments on your loan for a set period of time. The back payments can either be due at a set time, spread out over a year or tacked on to the back of the loan.
* Mortgage Modification - This practice is uncommon, but sometimes your lender will agree to a change in the terms of your existing loan, known as a mortgage modification. This solution seeks to make your existing loan affordable once again.
Looking for more ways to avoid mortgage foreclosure? Discover 11 ways to Stop Foreclosure Now - Click Here
To learn how to stop foreclosure yourself in as little as 20 minutes, check out the Foreclosure Survival Handbook