How to Cope with Foreclosure
Despite your best intentions, foreclosure can happen. Whether you have lost your job, fallen behind on mortgage payments, dealt with an expensive emergency or watched your home's value fall well below what you paid for it, foreclosure may be a reality for you. If this is the case, there are certain steps you can take to cope with the situation, including avoiding having your home put into foreclosure. If your home has already been foreclosed on, you may still be eligible for certain types of assistance.
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Instructions
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Retain the services of a lawyer. Banks may not do what is in your best interest when it comes to foreclosures, and you may be confused with the legal documents you will be asked to sign. Consult a foreclosure attorney you trust who can guide you through the process and ensure you are doing everything accurately and in your best interest. If you do not know any attorneys personally, ask your friends or family if they can refer you to a good lawyer.
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Find a rental that you and your family can stay in, at least for the short term. If your home has been foreclosed on, one of your immediate concerns will be shelter. If you lack the funds or good credit score for a rental, ask friends or family members if you can stay with them temporarily in a guest bedroom or in-law unit as you save for a rental or hotel room. If you have no one to ask for shelter and cannot afford a hotel room or rented apartment, local homeless shelters and religious centers may help.
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Cut costs where you can. Depending on your financial situation, you may need to save to pay monthly rent and other bills. Eliminate needless spending on items such as clothing, vacations and forms of entertainment such as DVDs, concert tickets or meals at restaurants. Use coupons when you can and scrutinize prizes to find the best deals. For example, a generic brand may offer a better price than a nationally recognized brand.
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Work with your lender to adjust your home's loan terms. Ask your lender how flexible it is willing to be with your home loan. For example, the lender may be willing to lower your monthly payment for an extended period of time or waive certain late fees for you to continue living in your home.
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Apply for assistance through the U.S. Department of Housing and Urban Development (hud.gov), also known as HUD, or at a similar neighborhood agency. HUD offers foreclosure avoidance counseling along with various services such as the Emergency Homeowners' Loan Program and the Making Home Affordable program that can help homeowners avoid foreclosure. HUD also offers information on rental assistance, tips on avoiding foreclosure, and local renting and relocation resources.
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References
- U.S. News Money; "7 Ways to Cope with the Stress of a Foreclosure"; Alan Dunn; May 2011
- Bankrate.com; Life After Foreclosure; Marilyn Kennedy Melia
- The New York Times; "Foreclosures Force Ex-Homeowners to Turn to Shelters"; Peter Goodman; October 2009
- U.S. Department of Housing and Urban Development: Avoiding Foreclosure
- Photo Credit David Sacks/Lifesize/Getty Images
