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How can I avoid having my home foreclosed on?

If you're struggling to pay your mortgage, you might find some solace in knowing that you're not alone. Each day, countless homeowners face that same dilemma.

While you might like to ignore the collection calls, you can't. Not only do you need to have somewhere to live, but doing so can impact your ability to qualify for credit or rent a new place.

With that in mind, you might be wondering what you should do if you are struggling to make your monthly payments on your home. One of the first people you should call is your lender.

In explaining why you are unable to make timely payments, they will ask you about the permanency of your injuries, medical ailment, or lack of work. They too will ask about any assets you may have to use to pay the amount you've accumulated in the arrears.

Many loan offers are backed by a type of mortgage-insurance. This allows them to offer a number of foreclosure-delaying options including loan forbearance, mortgage modification, and a partial claim.

With a forbearance, a lender may allow a homeowner to temporarily stop making payments while they are facing limited-term difficulties. Once the borrower is well or has gotten back on their feet, in most cases the lender will implement a repayment plan that has been crafted in order to bring all amounts due current once again.

Mortgage modification involves the lender completely restructuring the loan. In this case, any missed payments or overdue fees are generally tacked on to the loan's remaining balance. In some cases, the interest rate is modified or loan's terms are extended as well.

A partial claim is exclusively offered to those who have FHA-insured loans. In their case, they are offered secondary loans to cover the amount in the arrears. It is only collected on once the home's first mortgage has been paid.

In the absence of the implementation of the aforementioned options, homeowners have few options to remain in their homes. In these cases, in order to mitigate the damage to the borrower's credit, the home's owner should hold a pre-foreclosure sale of the home or deed to get the property back to the lender whenever possible.

If you're facing foreclosure, a Toms River, New Jersey, bankruptcy attorney may be able to give you the necessary advice to decide what option is best for you to pursue.

Source: U.S. Department of Housing and Urban Development, "Save Your Home: Tips to Avoid Foreclosure," accessed May 19, 2017

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