Have you already made one of these mistakes?

1. Not identifying all the options:

One of the more common mistakes homeowners make when they face foreclosure is to not work hard enough towards identifying all of their options. It always surprises me how unmotivated some homeowners can be about becoming educated.

2. Not assessing one's personal financial situation:

In my opinion, one of first things a homeowner facing foreclosure should consider is to thoroughly review his or her personal financial situation, first and foremost. The status of a homeowner's financial situation is the determining factor in whether or not they can 1) cure the back payments and stay in the home or 2) sell the property and move to something more affordable. Knowing your situation allows you the flexibility when working to resolve your situation.

3. Not becoming educated about one's legal rights:

Understanding your situation and identifying possible solutions is vital to successfully resolving your default situation without becoming a victim. It is very important that someone facing foreclosure should know his or her legal rights. If you do not know your legal rights then how would you know if you are making a great deal or losing your shirt?

4. Making a deal without consulting an attorney or a tax advisor:

I encourage everyone facing foreclosure to evaluate every possible resolution and then share those solutions with their personal tax advisor and attorney. This parallels the previously discussed topic: how can you be sure your getting the good end of the stick if you are not sure of the length of the stick. Always level the playing field with a potential homebuyer, you know they had an attorney review their documents, so why can't your attorney review the documents as well before you sign them? If the investor resists, that would be a red flag.

5. Not contacting the lender:

Another common mistake homeowners make is to not talk with their lender(s). Its understandable that no one likes to talk with creditors, but did you know that one of the easiest and most common ways to avoid foreclosure is to enter into a work out agreement with your lender. Lenders are surprisingly willing to work with a homeowner to get him or her on the right path to reinstatement. Remember, the lender wants to be paid the interest on the mortgage; they are not in the business of foreclosing.

6. Becoming Emotional:

Emotion is great for some things and terrible for others. Being emotional when you are attempting to resolve the default on your mortgage is not smart. Unfortunately our emotions often allow people to mislead us. Whenever you are involved in any investment transaction, it is important to focus on the facts. When people get emotional they lose sight of the facts and often suffer the consequences. The best option is to leave emotion out of your foreclosure resolution plans.

7. Walking away from their investment:

I always hear of homeowners who just sign over their house to escape their debt. In some situations this could be the best option, but I always recommend negotiating for a bit more. The point being, you should ultimately get something in return for selling your home. Some options could be to 1) have the buyer pay your moving expenses or 2) have the buyer give you three months in rent at a new place. In most situations your home is worth more then you think, so do not be afraid to be greedy! Remember, when it all comes down to it: it is a negotiation!

8. Not identifying personal goals:

When you are reviewing your options to refinance or sell, you should always write yourself a list of things you would like to happen. Whether these items are tangible or not, it is very important to identify what will satisfy you personally. Financial problems often affect all aspects of our lives and it is important to not sacrifice our relationships over some late mortgage payments. After all, our relationships are much more important.

9. Not seeing the truth:

Managing the truth is an important aspect of recovering from a financial misstep. You need to manage both your possible solutions with the timeline for your foreclosure. If you understand the processes and procedures, you can take advantage of the court required waiting period in order to reinstate your loan. The best advice is threefold: 1) Manage your timeline, 2) manage your decision making, and 3) manage your goals.

10. Making an impulse decision:

The final mistake and sometimes the most critical is a homeowner making an impulse decision. Instincts drive us to make quick decisions in order to resolve defaults as soon as possible; but I would recommend to any homeowner to sleep on any decision regarding the sale or refinance of your property. Take adequate time to weigh the benefits, both positive and negative, before making a decision. The deal you have today should be there tomorrow or it's not a good deal.

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