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Facing A Foreclosure And Your Options

Jan 24, 2008
Foreclosure is the process of the government taking control of a certain property. This is usually the situation when a person purchases a home and the financial lender a security interest in the house. Unfortunately, if the buyer is unable to make the mortgage payments in a timely manner, the lender is able to have the house auctioned off to make their money back on the house. If the money that is due to the lender is not recovered, the original purchaser of the home can have a deficiency judgment placed against them.

When purchasing a home many buyers do not expect to have a foreclosure but the unexpected can and does happen. You may endure a divorce, lengthy sickness, unemployment, a product of unwise financial spending, bad budgeting or a number of other reasons that can occur.

Emergencies often happen when you least expect them and most often when you are the least prepared for them. When you are facing large amounts of debt, having a foreclosure can seem like an easy way out of a difficult situation. Thinking of the future and your long term financial stability may not be what you are focusing on. Later on the foreclosure will appear on your credit record and can keep you from purchasing a house or car when you are more financially stable and ready to make a long term financial commitment. Foreclosure and a deficiency judgment can harm you in any future venture that requires your credit to be considered.

When you are close to having your home foreclosed on, you may be unsure of what options you have to help resolve the situation. First you must decide if your inability to pay is only a short term situation or if it is one that you are going to be experiencing for the remainder of your mortgage. If your inability to pay is a short term problem, you may be able to consider several options until you are more financially stable and have the ability to continue your payments in a timely manner. Being honest with yourself regarding your finances can help you to make an informed decision. When you are faced with a difficult situation, you can always call on your family and friends. If you are dealing with a short term money problem, you may want to consider whether you can ask your friends or family to help you with a loan.

If you are able to borrow from them, keep them well informed of your situation and when you will be able to pay them back. Another good idea is to speak with your lender. Explain to your lender why you are currently unable to make your payments and when you should be able to resume making your payments in full. Foreclosing on a house is costly and time consuming for lenders, so they are usually willing to try and work out an arrangement with the home buyer to work things out for smaller monthly payments or even suspend payments for a few months while the buyer gets back on their feet.
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