Are you behind in your house payment? There may be alternatives to foreclosure that you have not thought about. In today's environment lenders don't really want to take your house. There are costs involved in foreclosing that lenders may never recoup. So thinking outside the box may help you both.

What triggers the foreclosure process? Let's say you are 30 days past due on your mortgage. At this point, you not only owe your lender the missing payment but you also owe late charges as well. At sixty days past due, you now owe two missing payments and late charges. However, at 90 days past due, depending on the terms of your mortgage, you don't just owe 3 missing payments and late charges. Instead, you are now in default under the terms of the mortgage and have triggered the acceleration clause. Now the entire loan balance is due and payable. Well it's fairly obvious that if you couldn't make one, two or three monthly payments in a row coming up with the entire loan balance is pretty unrealistic! So what should you do if you are behind in your house payments?

The first thing you will want to do is read your mortgage. Find out what constitutes default and what triggers the acceleration clause and try to avoid that situation. If you don't have enough money to pay all your bills on time, be creative. Making partial payments to some creditors while making your house payment on time could make sense over the long run.

The second alternative will be to talk with your lender's customer care advocate. Generally, when a borrower becomes past due on his or her home loan, the lender will contact the borrower immediately. If this happens to you, don't ignore that call. Talk to your lender, explain your particular situation and together you may be able to take steps to save your home. Often you may be able to set up a plan to become current by paying a portion of the past due amount along with your normal payments. Sometimes, you may be able to put your past due payments to the end of the loan and pay only the interest portion immediately. Sometimes the past due payments could be spread out over several months. No matter what arrangements you make with your lender, remember to always get the agreement in writing! If you are asked to submit paperwork, make sure you send it in a manner that provides a proof of delivery.

Third, if you can't make arrangements with your lender you might be able to apply for a "hard-money" loan. Lenders of hard-money loans generally charge higher interest rates and a greater amount of points than conventional lenders, so you need to be sure you can pay back this type of loan. If you didn't read the promissory note and the mortgage when you first bought your home, you must read this note!

Fourth, if you have equity in your house, it may be a good idea to put your house up for sale while you are investigating your alternatives. Selling your house yourself may help you to save some of the equity you have built up in your home. If you're in a situation where your property value has depreciated and you can't sell it for enough to cover what you owe, you might consider asking your lender to take a deed in lieu of foreclosure. In this situation you agree to give the lender the deed and the keys to the property in exchange for being released from your entire financial obligation. One reason a lender will agree to this arrangement, even though it puts the house in their inventory, is that it can save them costs they might not be able to recoup. Also, if the house eventually sells for more than you owe, the bank keeps the overage. It will not be returned to you.

Fifth, your lender might also consider a short sale, especially in a down market. In this type of arrangement the lender agrees to sell you or a third party, the house at less than the entire mortgage balance. Lenders will consider this type of arrangement in a down market. It keeps the property from becoming a nonperforming asset in their portfolio. They also won't have to pay all of the extra expenses like upkeep and maintenance, taxes and insurance. Plus it will save them from having to lower the price of the house on resale to meet current market values.

If none of these options are viable for you, you may want to consider filing bankruptcy. Filing bankruptcy stops a foreclosure in its tracks. In order to resume the foreclosure process the lender must request relief from the automatic stay. Also, depending upon the state in which you live, filing bankruptcy may allow you to keep up to $125,000 of the equity in you have in your home.

So if you are having financial difficulties, remember there are alternatives out there to help you. Don't procrastinate! The important thing is to be proactive and research your alternatives!

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