When you owe more money on your home than it is worth, when your earnings are reduced, and when consistently making your home payments becomes an impossibility for the foreseeable future, you need to start saving for the eventuality of foreclosure. While we don’t think anyone should avoid their responsibilities, a foreclosure is all but unavoidable.

Playing the Delay Game

If your lender knows that a default on your mortgage is inevitable, there is a possibility they will “fast track” the process and you will be out of your home in 4-6 months. You need to delay the process as long as possible without investing any more money in a home you’re going to lose anyway.

Cease Payments As Soon As Possible

Continuing to make payments when foreclosure is inevitable is a big mistake. Sooner or later, eviction will come. You’ll need whatever cash you have now in order to buy basics such as groceries and save up for first and last month’s rent on an apartment. It makes no sense to put more money into a house you’re going to lose anyway.

You may be asking yourself if ceasing payments is alerting the lender that foreclosure is inevitable. Not true. Many people who miss payments on their homes catch up on them later on. A note of caution on the consequences of stopping payments – your credit rating will suffer for years from the moment you stop making them.

Be Honest, But Not Forthcoming

As a part of the process, you’ll begin to get payment delinquency notices and then foreclosure notices. Don’t call and tell your creditor you’ll never be able to pay. There is a legal process to go through that gives you some time from the first failure to make a payment until you are forced out of your home. If you find a great job before the foreclosure process is completed, you can usually contact your lender immediately, resume payments, and work out a plan to halt foreclosure. But if you don’t find a good job, you need to just silently follow the process and save your money until it is time to move into an apartment.

Delay Foreclosure by Applying for a Mortgage Restructure

Many lenders have voluntarily suspended foreclosure for anyone applying for the Making Homes Affordable Program. Why not apply? It may be that your lender will be able to work out a plan with you so your can afford your mortgage payments. If that’s the case, you’ll get to keep your home.

Harsh Reality

If you’ve not been living under a rock for the last 3 years, news about foreclosures is everywhere and the ranks of people with foreclosed homes is growing. The knowledge you’re not alone probably doesn’t make it any easier.

Again, we are not advocating foreclosure. Going through foreclosure is obviously something to be avoided whenever possible.

Have you had to go through a foreclosure, or is foreclosure a possibility for you in the future? Tell us about it by leaving a comment!

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