Fighting Foreclosure

With unemployment on the rise, many homeowners are threatened with foreclosure. If you cannot keep up with your monthly loan repayments, the bank has the right to take your home and sell it to recover the money you owe. Here are five tips to help you keep your home in troubled times:

1. Do not ignore the letters from the bank. It's tempting to stick your head in the sand and pretend the problem doesn't exist, but that's the worst thing you can do.

2. Talk to the bank. They may be more understanding than you think. The bank doesn't want the hassle of foreclosure. They'd rather you kept your house and continued making payments. You may be able to negotiate with the bank to temporarily lower your monthly payments.

3. Try refinancing. If you bought your home when interest rates were high, you may be able to lower your repayments by refinancing your mortgage. To do this, you will need to have a job and a pretty good credit history. If your credit score is too low, no lender will let you borrow money at a low interest rate.

4. Ask your lender about loan modification. This means changing one or more terms of your borrowing agreement. This may ease your financial burden enough for you to hold on to your home.

5. Consider selling your home. Selling is better than foreclosure, especially if you have equity in the property. If you're in negative equity (you owe more than the house is worth), you may be a good candidate for a short sale. With a short sale, the lender agrees to accept less than the total amount you owe. It will reflect negatively on your credit history, but it may be the best option you have.