How to Prevent a Foreclosure

If you’ve exhausted all other options you may find yourself facing foreclosure and the prospect of losing your home. You should know that this will have a serious effect on your credit score – usually causing it to drop at least 200-300 points. More seriously, this means that foreclosure will remain on your credit report for up to 7 years and can prevent you from being able to secure a mortgage on another home. This is why you should take a close look at all options when you know you’re going to be delinquent on mortgage payments, and try to avoid foreclosure at all costs.

When foreclosure looms on the horizon and if you know that you’ll have to default on your home loan, contact your lender right away. They may be willing to work with you to come up with an arrangement that will allow you to prevent foreclosure. This is in their interest as well as yours. Loan modification could be a solution, and would entail modifying the terms of your current loan. Among other methods, you could negotiate to reduce interest rates, increase your monthly payments, or catch up on missed payments.

A bank might also be amenable to a short sale to help you avoid defaulting on your loan. This might be your only alternative to foreclosure if you have no equity in your home. It still involves a loss to the lender; they’ll have to sell your house for less than what it is worth but for much more than they’d receive in a foreclosure auction. This could be another way to stop foreclosure. This is not the best option, however, as your credit will be impacted almost as much as with a foreclosure – but you could be eligible for another home loan in as little as two years compared with the much longer time period associated with foreclosure.

If there’s no way you can avoid foreclosure, be prepared for the following:

• When your payment is 30 days late, you’ll receive a “Notice of Default.”
• After 60 days, the lender will contact you directly for payment, usually with a series of phone calls.
• After 90 days, the lender has the option to foreclose on the property.
• 6 months or more after your first missed payment, the bank will auction off your property.
• After the auction or “sheriff’s sale,” the eviction process will begin and you will have to vacate the property by a designated date.

You want to prevent foreclosure at all costs, but if it has already happened, you do have a possibility to remove foreclosure from your credit report. Lexington Law has a team of experts that can help you remove foreclosure or other negative items from your credit file, so contact Lexington Law’s professionals today and find out how they can assist you with foreclosure credit repair.