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Seven Ways to Save Your House From Foreclosure

By Erik Folgate

If you haven’t already noticed, the housing market is correcting itself right now. That’s what capitalistic markets do, they correct themselves. The government has intervened a little bit, but for the most part, you are seeing the housing market fix itself. Unfortunately, thousands of hard-working citizens are losing their homes. They bought during the boom, might have stumbled into a mortgage they didn’t understand, or they wanted to upgrade their house, but really couldn’t afford the new payment. Foreclosure is all over the place in states like Florida, Nevada, California, an New York. I live in Florida, and I can literally open up the newspaper and find hundreds of foreclosures every weekend. So, here are ten ways that I think you can save your house and avoid foreclosure. Some of these might seem out of reach, but it’s still an option.

  1. Sell everything you can put your hands on. I’m talking about selling the dog, the kids, (i’m kidding!) whatever you can get your hands on. The quickest cheapest way to sell furniture, electronics, collectibles, cars, and anything else you can find is Craigslist. It’s free to list stuff, and you can post up to four photographs for free. Go and get your sell on!
  2. Refinance your mortgage. If you plan on staying in the home, it makes sense to refinance your adjustable rate mortgage. If you are upside down on the house, this may be a tough task. Most mortgage companies want the house to appraise for the amount of the mortgage.
  3. Get a second and third job.
  4. Negotiate the interest rate. Contact your lender, and explain that you cannot pay the current mortgage amount. Foreclosure is expensive for lenders and they are willing to work with you, because they know the current market situation. Believe me, they would rather you be paying payments, rather than them taking it over and reselling it at a discount and spending a bunch of money on court fees.
  5. Stay away from “foreclosure help” scammers. There are tons of people out there looking to prey on the desperate, so one of the BEST things you can do to save your home is to stay away from these people. If the deal sounds too good to be true, it probably is too good to be true. Don’t EVER sign over the deed to your home to ANYONE.
  6. Prioritize your bills and debts. Stop paying the credit card bills. Yes, you heard me. Stop paying them! Get rid of the cell phone bill. Get rid of the cable bill. Get rid of the Zephyrhills bottled water bill. Don’t pay them until you’re current on your mortgage and you are able to pay the mortgage comfortably. I’m not telling you to go delinquent on the accounts forever. But, the mortgage needs to be your priority. It’s putting the roof over your family’s head. Getting rid of the smaller bills in your life is only temporary until you can get back on track with your mortgage payments.
  7. Dip into your Roth IRA. Notice, I didn’t say to dip into your retirement account. If you have a traditional IRA or 401k account, the fees are going to be devastating if you dip into it. Most Roth’s don’t have a penalty for withdrawing money early.

Why is Saving Your Home So Important?

Ask anyone who has lost their home, and they will tell you that it’s no walk in the park. It’s devastating, and it ruins your credit. You won’t even be considered for an FHA loan for 3 years after a foreclosure. It’s the roof over your head, and walking away from your home should only be an option after you’ve exhausted all other options. Even if the things I listed above do not help your situation, you can still find ways to sell the home by getting the lender to agree to short sale the house or doing a “deed in lieu of foreclosure” agreement which is when you sign over the deed to the lender without going through the formal foreclosure procedures. It’s still a blemish on your credit, but not as bad as a foreclosure looks.

If you take the time to make sacrifices, saving your home can become a reality.

Erik Folgate
Erik and his wife, Lindzee, live in Orlando, Florida with a baby boy on the way. Erik works as an account manager for a marketing company, and considers counseling friends, family and the readers of Money Crashers his personal ministry to others. Erik became passionate about personal finance and helping others make wise financial decisions after racking up over $20k in credit card and student loan debt within the first two years of college.

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  • http://mrsmicah.com Mrs. Micah

    I’ve seen a lot of ads for quick easy money if you just give them the title to your car. Eek. Sure you’re supposed to get it back if you pay them back the money with interest and you “get to keep the car” in the meantime. But it’s not really yours…which is scary.

  • http://wealthboy.com WealthBoy

    Some good advice. Another option would be to sell your vehicle(s). If you’re upside down on any of them and can’t sell them to get some cash, you may want to stop making the loan payments. Just as you said under “Prioritize your bills and debts,” as crazy as it sounds to stop making car payments, paying the mortgage needs to be priority #1. Would you rather live in your car or your home? I say it’s better to give up your car before you ever give up your home.

  • http://www.livingoffdividends.com/2008/03/14/gold-cracks-1000oz-investing-for-a-recession/ I made $1921.11 Last Month In Passive Inco

    I think renting the kids out by the hour is a better solution. They’re good for yard work, cleaning or even eating stale food that you can’t bring yourself to throw away!!!!

  • http://www.thewisdomjournal.com Ron@TheWisdomJournal

    Great list, but I’d be willing to bet that #3 is the one most people will refuse to do.

  • http://www.masteryourcard.com Rachel @ Master Your Card

    I have triedmany things to optimise my savings and reduce my debts. I have found that making sure you are paying low amounts on your mortgage, loans and bills is great but the best way is to earn more money. There is no replacement for hard work….. unfortunately!!

  • Stuheath575

    This is such a terrible article. I myself help many people avoid foreclosures (contrary to what you say in option #5), and would never advice any of my clients to take your options. Most of the people I deal with have no job, can not find another job, so how would they get a 2nd and 3rd job. Also who really wants a 2nd and 3rd job? There are so many options available to home owners, especially one who are upside down. I do however agree with the part where you state to never sign your deed over to someone who wants to help. Any possible way someone can help an homeowner, does not require the deed to be signed over to them.

  • CAnLA34

    Those options sound pretty silly. I’ve down some of them and my Lenders still don’t want to work with me. We filed Chapter 13 thinking that would save our home but all it did was add all the past payments to the tears. Were still obligated to pay the mortgage amount, and the problem is we cannot afford the $2600.00 payment anymore since the School Districts in California are suffering from the Budget Crisis. And Unfortunately our mortgages are with a Credit Union and there not willing to Modify or work with us, and all the programs geared to help Californians keep there homes or help to Modify or Refinance doesn’t apply because the Loan is through a Credit Union. Were are frustrated with the system and don’t know what else to do. Can anyone help or give me advice as to what course of action to take. Unfortunately our home has been appraised for a lot less than the loan was originally for and the home needs some repairs to it. Any advice feel free to Email me at [email protected]

  • Homesalesbymaria

    Just an FYI: Our mortgage is upside down, we know this as we paid for an appraisal. Our home has been listed for sale off and on for 6 years with continued price reductions. We are current with payments and have sacrificed in other ways, knowing the importance of having a roof over our head. We tried to get help from the gov’t thru the bank with the “hardship claim” and we were turned down. We continued to contact the bank via mailings and calls to get assistance. We basically became a thorn in the banks side and time after time heard, “you have to stop making payments to get help”. Don’t believe them. Bank employees are paid to say NO! After multiple contacts they have agreed to allow us a short sale which is not as bad on your credit as a foreclosure. It is important to us “morally” to do the right thing. We are blessed by open communication with the bank and their willingness to work with us. It does pay to keep your payments up!

  • Gio

    rent rooms weekly for $90

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