Foreclosure Avoidance Programs
Foreclosure is an emotional, mental and financial headache. With stress as a major distraction, many homeowners forget that there are programs available to help them save their homes. If you are in search of a program to avoid foreclosure, start with the U.S. government. The Making Home Affordable plan of 2009 has a range of options for families looking to remain in their homes.
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Eligibility
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Foreclosure avoidance programs are not open to all homeowners. Special stipulations apply for each program. A common thread among all foreclosure prevention programs is the relationship between your mortgage debt and your financial hardship. If it can be determined that your mortgage loan is predatory or is unaffordable, you have a better chance of qualifying for a Making Home Afforable program.
Modification
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Once you fall behind on your mortgage, call your lender to discuss the possibilities of a loan modification. Generally, a homeowner must be more than 30 days late on his mortgage before a loan modification can be approved. Loan modification works in multiple ways. The lender can make adjustments to the amount you pay monthly or add the past due payments to the principal balance of your loan so that your account is brought into good standing.
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Refinancing
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Homeowners with high interest rates may find that their monthly mortgage payments are unreasonable in relationship to their overall household budget. The Making Home Affordable program allows homeowners who are current on their mortgages to apply for a refinance. Refinancing to a lower interest rate can save some homeowners hundreds of dollars per month.
Forbearance
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Forbearance occurs when your mortgage payments are temporarily suspended or reduced. "Forbearance may be an option if your income is reduced temporarily (for example, you are on disability leave from a job, and you expect to go back to your full time position shortly)," explains the Federal Trade Commission. At the end of your forbearance period, you are generally required to pay higher monthly payments to make up for the reduction during your forbearance period. In some cases, a lump sum payment may be due instead.
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