Orange County Real Estate

Real Estate Tips:

Top Three Ways to Avoid Foreclosure

At any given time, there are nearly four million Americans at risk of losing their homes to the foreclosure process. Many of these individuals are having trouble paying for their mortgage due to losing their job, predatory lending practices, or a medical condition that leaves little money for anything else.

A survey conducted by Freddie Mac, one of the premier home loan lenders in America, found that nearly 66% of borrowers with delinquent payments are unaware that there are actions they can take to avoid foreclosure on their real estate investments. Many home loan lenders are willing to work with individuals to avoid foreclosure because it costs them more money to foreclose on private real estate than it costs to wait for the borrower to get back on their feet.

A recent article published in the New York Times confirms that it will cost the home loan lender an average of $40,000 to foreclose on a real estate loan, money that many lenders would rather not spend. To avoid this option, many lenders have specific repayment options that can help delinquent borrowers retain possession of their homes.

Steps to Avoid Foreclosure

1. Communication: The first step toward avoiding foreclosure is to communicate with the lender. This is the step that many homeowners have the most trouble with. No one wants to feel like a failure and many homeowners are embarrassed to discuss personal finances with a stranger. Regardless of personal feelings, though, the lender should be contacted and financing options discussed as soon as the homeowner realizes that they are going to have a problem paying their mortgage payments. The earlier that options can be put into place, the faster the homeowner can get back on track.

2. Review Options: The second step in avoiding foreclosure is to carefully review the options that the home loan lender has given to you. The major focus here is to avoid getting into more debt by accepting a payment plan that you cannot afford. That could force you into eventually having to deal with a foreclosure anyway.

With the help of your lender combined with a careful review of your financial situation, you can determine your ability to realistically make payments on your home. You may discover where you can trim your budget to save money and increase your ability to pay your loan. After reviewing your complete financial picture, you can choose the repayment option that is right for you.

3. Pursue Other Avenues: If your lender seems unhelpful or unwilling to work with you to resolve your situation, there are other avenues that you can turn to for help. One of the best places to turn for help is the Homeownership Preservation Foundation, which is a nonprofit organization that is dedicated to helping homeowners resolve financial problems and retain their homes. The organization is certified by the Department of Housing and Urban Development and has helped over 100,000 homeowners avoid foreclosure.

Contributing author: Colorado's Louisville real estate experts -- Automated Homefinder.