How to Stop a House Repossession

The housing market has its ups and downs, depending on the overall financial health of the nation. When the market is in a down time, interest rates may rise, leaving homeowners who have adjustable rate mortgages with higher payments than they can afford. In circumstances such as these, it's not unusual for homeowners to fall behind in payments and face repossession, or foreclosure. When this happens, it can seem like the situation is hopeless, but it is not. There are ways to stop a house foreclosure.

Instructions

Difficulty: Moderately Challenging

1. Contact your mortgage lender. Lenders are almost always willing to help borrowers who are in financial trouble. It costs money for a lender to repossess a house, and most want to avoid it. You may very well be able to work out new loan terms or a reasonable payment arrangement to pay back your missed payments.
2. Refinance your house. Refinancing pays off the old loan and allows you to start over again with a new loan, sometimes at a better interest rate. Shop around at different lenders to find the loan with the best terms.
3. Cash out your home equity. Use the equity money to get caught up on your missed payments (and maybe make a few extra toward the future) to put a stop to foreclosure proceedings.
4. Rent out your house. Make sure the rent you charge is at least slightly more than your mortgage payment. This will allow you to keep making the payments, while taking no money out of your own pocket.
5. Sell your house to stop repossession proceedings. You own your house until the day the lender sells it at auction. Up until the moment the house is sold by the lender, you have an opportunity to sell it yourself and avoid a repossession being placed on your credit report.

Tips & Warnings

• If you rent out your house, a month-to-month arrangement will give you the freedom to move back into the house on short notice, should your financial circumstances change. However, the security of a lease may make your house more attractive to renters.
• Be careful if you decide to work with a private investor. Investors may offer to buy your house for cash, but the price they offer you may be far less than what you owe on the house. While it may seem worth it to go tens of thousands of dollars into the hole to keep a foreclosure off your credit record, remember, the mark on your record will only be there for ten years, while it may take you twice that long to earn back the money you lost.