Is Your Home at Risk?

How can a homeowner know that their greatest asset - their house - is in danger? What are some of the early warning signs of foreclosure? There are a couple clear signs that can't be ignored, but some signals of financial peril are a bit more subtle. Whether you live in San Diego or the Bronx, foreclosures are happening around you every day. Knowing what the warning signs are will ensure that you'll know if your home is at risk.

An obvious sign of clear and present danger is missed mortgage payments. Unlike a late water bill or a missed payment on a store credit card, lenders take mortgage payments very seriously. Missing a mortgage payment is serious business. Lenders will usually begin calling you when the grace period passes after your first missed mortgage payment.

Although it's an embarrassing situation, do not avoid their calls. Tell them exactly what's going on, and they may be surprisingly understanding. Good communication is very important, so be sure to let them know the state of things and when you hope to make your payment. Missing even just one mortgage payment will damage your credit score considerably, so try to set up a payment plan rather than avoid your lender's phone calls and letters. If you ignore the lender, they will send your information to a loss mitigation company or lawyer.

Watching time lapse without taking action is the single worst thing you can do. Once your mortgage isn't completely current, your lender may begin the foreclosure process by filing a "notice of default," which pretty much means pay up or get out. This officially starts your reinstatement period, which means you need to pay all of the fees and late payments or else a date of sale will be established. If more time is allowed to pass, you will receive a "notice of sale" and your home will be put up for sale by your lender. You and your family will be evicted once the process has gone this far.

There are also more subtle signs that your home is in danger. When you purchased your home, did you sign on for a 30 year fixed mortgage, or did you sign up for "creative" financing to lower your payment? If your payments are slated to increase and you can barely afford the bills you currently have, it's time to consider getting out of your house before it's too late. Selling a home in today's market may take a long time, so don't wait until you're in over your head to make a move.

The worst thing you can do during this process is to pretend that there isn't a problem. If you don't take actions to prevent foreclosure, you and your family will most certainly lose your home. As soon as you think there is a slight chance you won't be able to make your mortgage payment in the future, you need to look into your options. Don't just bury your head in the sand and hope it will all work out for the best. The longer you wait, the fewer the options available to you.

Don't let foreclosure happen to you. It is possible to sell your home long before the foreclosure process reaches its ugly end. Find a trusted realtor or foreclosure counselor and find out your options before your credit is totally destroyed and you lose your home. It is better to sell your home than to have it taken away from you. A little bit of planning and the help of an expert realtor in this situation can make or break your financial situation for the rest of your life.