Having trouble paying your bills and mortgage is stressful enough, but even more so when you are at risk of losing your house. Not only do you need to figure out other living arrangements, but a foreclosure can make a big hit on your credit history. There are some alternatives that might help you either save your house from foreclosure or at least save your credit.
Request Alternative Payment Arrangements
When you can't pay your mortgage, the first thing you should do is contact your lender. They are often willing to provide a different payment arrangement so you can still pay part of your mortgage payment, but won't go into default and lose your home. If you are currently still struggling paying the full balance each month, ask the lender if you can pay smaller payments now, then set up a repayment plan in a few months. For example, while you are in between jobs, you might be able to pay less, then catch up when you get a job by paying more than what is due each month. The lender is still getting paid and you avoid foreclosure.
Apply for Refinancing
Refinancing your home may be an option if you have a good credit history and have not refinanced recently. When you refinance, you apply for a new loan at a better rate, whether with lower monthly payments or with lower interest, which further lowers the payments. The success of refinancing depends on several factors, including your credit history and income, as well as the value of the home and local real estate market. It is definitely worth a try if you want to save your home, but are having trouble keeping up with your high payments.
Consider a Short Sale
If you aren't able to work something out with your lender or refinance the home, you might not be able to save it. However, this doesn't necessarily mean you need to have a foreclosure on your record. If you are going to lose your home anyway, you might want to consider selling it. Since you still owe a good amount of money on the home, you will need to choose a short sale. With a short sale, you are trying to sell the home for less than what it is worth. The homebuyer is getting a bargain, but they need to know about the short sale since it all has to be approved by the lender. You first need approval to sell it as a short sale, then the buyer needs to have their offer approved. If all goes well, you will make enough to pay off what you owe and won't be looking at a foreclosure.
Speak to a general practice attorney before you consider any of these options. They will help you decide which option is best for avoiding foreclosure.