What to do instead of waiting for a notice of foreclosure

Homeowners in foreclosure who end up in my office are rarely surprised by their predicament. Most expected it for some time, but did nothing. This is a horrible mistake. If something happens and you know you will not be able to make your mortgage payments, you do have options. But if you don’t take action quickly, you may lose them.

First, of course, if you cannot make one mortgage payment, you will probably have difficulty making two, three, or more. This is probably a good indication that you should try renting again. It may be time to put your house on the market.

Selling is not the only option, however, if it is a near thing, you should pay what you can, while you can. Few lenders will foreclose if you are making a good faith effort to pay. Don’t do this merely to forestall foreclosure, however. Do it only if you need a bit of a break for a month. The better plan is to contact your lender or loan servicer and tell them that you are going to default on your loan. They should be willing to accept lower payments for a period of time, or you may be able to refinance your loan.

Whatever you do, be sure you confirm it in writing. If you don’t, you have no proof of the agreement’s existence.

In the end, if you can’t afford your loan, it is better to find this out early on, and to sell your house to pay off the loan.