Foreclosure is the process that mortgage companies use to try to recover the delinquent loans. The lenders do not want houses or any other real estate instead of money. They want the mortgages paid off and the mortgage payments current.

If you have suffered a financial setback, there is a great chance that you would like to prevent foreclosure and keep your home. Most of the homeowners in such situations think that they cannot save a home and have to ruin their credit, lose home and be put out on the street.

You can stop Foreclosure and save your home. However, you cannot delay another day, you need to act now. In most cases the home owners wait just too long, and the house has too much debt, late payments, fees, etc. and even investors cannot buy houses because the upfront cost (e.g. to catch up your payments) is very high. For example, a short sale, in this case, might be an option, where an investor negotiates with the bank to purchase the house at a discount. Though it is a time consuming process, which would not save your credit and would not harm as much as foreclosure, it will stop the foreclosure process.

Here are some of your options (most realistic):

• Doing nothing and going into foreclosure. That is right, do nothing, hope for the best and get foreclosed by the bank. This is not the end yet, you will lose your home, get your credit ruined (the credit score can drop by 100-150 points for being late on the mortgage for couple months ), you home will be sold to the highest bidder at a public auction, you will be evicted by a new owner will have to start everything from scratch, NO BANK will work with you for a number of years after the Foreclosure. So think really well before letting the mortgage company to foreclose on your house. Do something, anything... just to avoid going into foreclosure.

• Refinancing. You can refinance the existing loan with the current or a different lender. You would need to do the research on the terms and find a lender that has most attractive terms. This would involve you negotiating with a lender and filling out new paperwork. Be aware though of adjustable rate mortgages. If you got in trouble one time because of the adjusted rate on your mortgage, don't fall into the same trap again. Fixed rate mortgages are your best bet.

• Bankruptcy. Believe it or not, some choose to file Chapter 7 or Chapter 13 bankruptcy to avoid the Foreclosure. The truth is, there is no guarantee that Bankruptcy will stop Foreclosure. Bankruptcy may prolong the foreclosure and buy you more time; foreclosure proceedings can be temporarily suspended. However, the mortgage company can apply to the court for relief from the automatic stay, the order preventing creditor action by virtue of the bankruptcy. IF you get lucky, you may have all your debts wiped out completely, but in most cases, you would still need to repay past due amount and to negotiate with your mortgage company to keep your home. Therefore, your circumstances must be well suited for this option as you might end up in worse position that when you started. This option should come only as a last resort.

• Short sale is the sale of real estate when a lender is willing to accepts a loss - less than what to you owe on your mortgage. If there is no equity in your home to pay commission, closing costs in order to sell it or pay off your mortgage, then you might consider this option. However, this is a very time consuming and complicated process and your property can be sold only to a so called cash buyer. Therefore, you should not be completing a short sale on your own, but be better off if you hire a professional who has experience in short sales. Listing your house and waiting for an offer is not the best approach because you will lose the valuable time, and very few Realtors know the short sale process. Local home buyers such as investors, who specialize in buying houses fast, might be a better solution. Usually they charge you nothing to purchase your home and the bank does not have to go through the foreclosure process.

• Loan modification or forbearance agreement is re-negotiation of the terms with your mortgage company. You can go back your lender and ask to modify or restructure your loan. Some lenders will work with you and modify your loan by adding your back payments to the end of the existing loan principal, changing the interest rate or extending the term of the loan. You need remember, that the lender will not forgive the back payments - earlier or later you will need to pay these off. Also, in most cases the monthly payments will increase as a result of the spread out back payments, so make sure you can afford the new monthly mortgage payments.

• Pre-foreclosure sale / fast house sale will usually allow you to sell your house before you lender sells you home at a public auction. You may want to check on the timelines in your state, how much time you have before the auction date. If you can sell you house before the lender takes it then do it, even if it means that you will walk way only with the mortgage balance to cover the loan. Some real estate agents can work with you on selling your house and try finding you a buyer, but it may take more time because agents can work mostly with buyers that can qualify for a loan. Real Estate investors might be a better option in this case as they usually have funds ready to buy houses or work out another plan to stop your foreclosure process. Investors will buy your house As Is and in most cases they are able to close quickly, sometimes in couple days, if necessary. You will win buy selling your house quickly, but you will have to take a loss and often times settle for a mortgage balance (you should try to get your mortgage balance covered) either by getting a new loan and paying yours off or by taking over payments on the existing mortgage until that investor sells the house or refinances on the house. In any case, you will win because the foreclosure process will be stopped, you will save your credit and you will be able to move on with your life.

You need to choose an option that is best for your situation. For example, if you know that you cannot afford the house, the payments are too high, you cannot choose loan modification as this option may not help you to lower the monthly payments, but often times monthly payment might temporarily increase until you get current on mortgage payments. Similarly, a short sale might not be a good option if you do not know how to negotiate with a lender to accept less than what is owed on your mortgage or if you're want to get your equity.

Therefore, you need to know what you are trying to achieve and choose an option that best suites your needs. Options like doing nothing, filing a bankruptcy or a short sale will not save your credit. But if you are about to fall behind or you are already couple months behind on payments, your best alternative is to sell the house as soon as possible and avoid or stop the foreclosure if the lender has already started the process.

BUT, DON'T JUST SIT and DO NOTHING... DO SOMETHING...

If you're really serious about avoiding foreclosure, even if your home needs work, even if there is no equity in the house, even if you owe more than it is worth, even if you think that everything is hopeless and you have no money to spend, or if you are falling behind on payments... Stop and think again. You have options. You just need to start acting today.

Renata M. http://www.sellitindays.com If you want to know more about Foreclosure process or how to sell you house fast, click here

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