Avoiding Foreclosure: Your Options

As your debts loom and your monthly mortgage falls behind, you might think that foreclosure is your only way out. Happily, that's not the case for most homeowners. Depending upon your individual circumstances, you have plenty of other options, many of which are outlined below.


If you have enough equity in your home and your credit is still in good standing, you may be able to refinance your mortgage at a more favorable rate. Usually, this option is best for people who anticipate a decline in their income rather than those who've already fallen behind on their payments.

Forbearance or Repayment Plan

Let's say you're three months behind on your mortgage. In a forbearance or repayment plan, you would negotiate with your lender to repay the past due amount over a period of time. You still have to make your current payments, but this is a good solution for homeowners who have had a temporary hardship as banks would rather get their money than take your property.

Mortgage Modification

Modifying your mortgage may make all the difference in your ability to keep your home. The government recognizes this and has initiated a program called Making Home Affordable with options like HAMP, HAFA, UP and HARP (see the link below for more information).Typically, a mortgage modification will involve a reduction in your interest rate or the principal balance of the loan, a change in the length of the loan, or a combination of these options. The goal is to lower your monthly payment to a number that you can afford.

Deed in Lieu of Foreclosure

Also known as a friendly foreclosure, a deed in lieu allows you to return the property to the lender rather than go through the foreclosure process. Lender approval is required for this option and you must vacate the property.

Service members Civil Relief Act (military personnel only)

If you are a member of the military and are in financial trouble due to your deployment or the deployment of a family member, you may qualify for relief under the Service members Civil Relief Act. The American Bar Association has a network of attorneys that can help service members to qualify for this relief.

Sell the Property

If you have sufficient equity in your home, you can list their property with a qualified agent who understands the market conditions and foreclosure process in your area. HouseRebate's agents are experts in selling distressed properties and stand ready to help.

Short Sale

If you owe more on your home than it is currently worth, hiring an experienced real estate agent to market and sell your property is a great solution. Your HouseRebate agent will negotiate with your lender to get the best possible terms for you. You must be able to demonstrate financial hardship to qualify for a short sale. Short sales are also covered under the new government program, HAFA.

For more about Short Sales, click here.

Learn about government programs to help distressed homeowners here.