If you are struggling to make your mortgage payments on time, this is critical information for you because the clock may have already started on a road that could lead to foreclosure.  This is a simple guide to help those who find themselves in this unfortunate position:

1. COMMUNICATE with your mortgage company.  They know you are having trouble paying, but if you avoid their calls, letters, and other attempts to contact you,  they will assume that you are just avoiding them and in this case, they will just do whatever they can to protect their investment, including foreclosure on your home and removing you from it. You may need the assistance of a loan modification specialist , who has a direct connection with the bank as they seem to be communicating less and less with their customers due to an increased volume of pre-foreclosures.

2. Ask yourself why you are in this situation.   Is it short term such as a job loss or is it long term such as a divorce where two people were paying the mortgage, now only one is.  This is the time to be real with yourself.  A short term dilemma can often be worked around with a payment plan, but a long term dilemma if not corrected will usually result in a foreclosure.

3. Look at financial alternatives with your lender.  The bank will usually offer you some financial counseling in an attempt to restructure your loan.  They will need to know all of your income and expenses to see if you qualify for this.  Be very up front with them because if they find you are hiding information from them, they will be far less likely to help you recover.   A lender does not want your home, they just want you to pay your mortgage.  In fact, foreclosures cost them more money as they are not in the property sale business, but rather the lending business. Due to a high volume of delinquencies and foreclosures. It may be very difficult to get a response from your mortgage lender. 

4. Look at other sources of revenue.  Look to family or friends that may be able to help you out with a short term loan.  Consider getting a second job to bring in the additional money needed to recover from a short term financial setback.  Perhaps you have retirement funds or 401k funds, but be cautious of "throwing good money after bad", meaning that you have to KNOW (not just wishfully hope) that once you get caught up with the mortgage you will be able to pay all of your bills including the mortgage.  The worst thing you could do is to borrow money or liquidate your retirement and then still lose it and your home because you were unrealistic.

5. Seek professional help.  Contact your local real estate agent to find out what your home is worth and whether or not it would make sense to sell it.  Keep in mind you need to have a place to live, but perhaps a rental may be less than your mortgage.  Next contact your local consumer credit counseling organization to see what advice they can offer.  Lastly, bankruptcy lawyers can offer council on how bankruptcy could help you save your home by liquidating your other debts.

6. Get Out Fast.  If you are in a position where you just want out, there are always investors willing to help you out of your situation by buying your home quickly.  Beware that an unscrupulous investor does not capitalize on your misfortune however and hold your ground.  If you need a referral to a professional investor, please use our contact form and specify this in the comment box. 

There are two ways to sell your home to an investor. The first is if you have enough equity in your home (equity = market value divided by the total number of mortgages on the property), almost any investor will buy the home from you at a discount.  I strongly recommend trying to sell the home using a real estate agent first, as this will net you the most money usually.  If you need a referral to an agent in your area, please send us an email to info @ and specify that you need an agent.

Next, if you are like a growing number of people and you owe more than what your home is worth, you may need to do a short sale.  This is where the bank will agree to let you sell your home for less than what you owe on it.  Usually they will require you to prove to them that you have a true financial need or dilemma (which isn't hard) and you may get hit with a tax liability for the difference in what they sell it for, and what you owe.  The bad news is that once you are in a place where you can't pay the mortgage and you owe more than the home is worth, this is often your only other option next to a foreclosure which you don't want to show up on your credit report.

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