With foreclosure rates at record highs, more homeowners than ever are seeking out what options they may have in order to save their homes before they run out of time. Time is of the utmost essence during any foreclosure situation, and homeowners need to figure out what they can do to stop the process and minimize the negative effects after foreclosure. Acting quickly and keeping as many solutions on the table as possible are two of the most important keys to success.

In only a very small number of cases will it be advisable for the homeowners simply to walk away from the house. Giving up will only compound the problems, as the former owners may find it very difficult to qualify for a new home loan or even find a landlord willing to rent to them. Instead, it is usually a much better idea to consider various options that can be used to stop foreclosure, such as working out a plan with the mortgage company, filing bankruptcy, selling the house, or giving the bank a deed in lieu of foreclosure, among others.

Negotiating a plan with the lender should be the first option that homeowners turn to when attempting to avoid foreclosure. By working with the bank first, they will prove that they are serious about avoiding the foreclosure lawsuit, if at all possible. Lenders may have various workout plans that their clients can qualify for, including accepting partial payments until the owners are able to pay back the difference, accepting a late payment, or modifying the terms of the original mortgage. Other plans may include a forbearance agreement or direct reinstatement of the loan by paying back the total amount behind. If homeowners are able to qualify for any of these plans, it may be worth taking the bank up on their offer and seeking a longer-term solution when they have paid back the amounts they fell behind.

Filing for bankruptcy to stop foreclosure is another option, although it may only get the homeowners some extra time in which to find a more permanent solution. The automatic stay of the foreclosure process can put off the danger of losing the home to a pending sheriff sale, but bankruptcy often results in a higher payment during the plan than the homeowners were paying before filing. If they are unable to make these payments, the bank will attempt to have the stay removed and proceed with the foreclosure. Homeowners who choose to file bankruptcy can make sure that they do not face this danger by maintaining a stable income, focusing on paying the reorganization plan on time, and working on finding a better resolution as soon as possible.

Selling the home is also a reasonable solution to foreclosure, especially if the homeowners are unable to make their payments on the mortgage ever again. This may be due to a loss of second income, dramatic decrease in income, or permanent disability or death of a family member. It may even be a result of having to find a job in another location far from the current home, and the two payments can not be maintained. But in the down real estate market right now, many homeowners may need to pursue a short sale to unload the house. This occurs when the mortgage company agrees to take less than the total amount owed on the mortgage as a payoff, and is a useful tool when selling a home with a high balance and little equity.

As a last resort, many homeowners may wish to consider giving the bank a deed in lieu of foreclosure. This is when the bank accepts the property back as payment for the mortgage, and the foreclosure process is ended right then. The lawsuit is avoided, the sheriff sale is called off, and ownership of the house is simply transferred to the lender. In many cases, this will help the homeowners' credit after foreclosure, by avoiding some late payments and keeping the full foreclosure off of their history; but former owners can also negotiate with the bank to keep even the deed in lieu off their report. The bank may not be willing to go this far all of the time, but it is worth asking for.

Homeowners, when facing foreclosure, should keep in mind as many options as possible. The few described here are certainly not all of the ways to stop foreclosure that may be considered. Fighting a legal battle with the lender is another option that represents a whole different topic, although it is one that many homeowners may need legal advice to pursue correctly. But the most important point is that all foreclosure victims should consider various methods to save their homes, and make sure that they have backup solutions ready to go at all times. The worst feeling during the foreclosure process is finding out that one solution will not go through, but having no other plan that can be implemented before a sheriff sale. Homeowners should avoid the chance of this happening whenever possible.

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