Avoiding Foreclosure

Currently real estate markets are experiencing a severe downturn in many parts of the world. Foreclosures and mortgagee sales are filling the local newspapers these days.

Of course, the prospect of losing their homes is very upsetting to those people involved, as well as their friends, families and associates who may be affected in one way or another. Believe it or not, the lenders are not happy either.

You might also spare a thought of extra compassion for those who have their savings invested in these mortgages. Most of these homeowners are just regular people who could be at risk of losing all their life savings when some of the less competent financial institutions are forced into receivership. You may be tempted to say that they should have been more careful in the first place, but it is very easy to be wise after the event.

Foreclosures and mortgagee sales are something nobody enjoys … except, perhaps, for the opportunist that gets an outright bargain. For everyone else it is just worry, stress and heartache.

So what can be done?

For those homeowners that have no equity and have a 100% mortgage in the property, the best thing may be to just walk away from everything and rent for awhile. This might make it difficult to borrow money again in the future. Only the person involved can analyze his or her situation to decide whether this is worth getting out from under.

But what if you want to stay on in your home? It may pay to seek the assistance of a financial advisor or prominent mortgage broker.

• First, you need to have your finances properly ordered and appropriate budgets put in place. Then you can search out alternative mortgage finance with better or more affordable repayments.


• There are many mortgage variations out there that could fit perfectly. Just simply lengthening the term of the mortgage could be all that is required. This can work very well for hard-pressed homeowners. Bear in mind, there will be more options available if you do not to get a bad financial record before seeking an alternative mortgage.


• Try to look ahead and if you see a financial crunch is unavoidable, take steps to refinance before you get behind in your mortgage payments.


• On the other hand, if you can emotionally detach from your home, sometimes it can simply be better to sell and salvage what money you can from the property. If you leave things until the mortgagee auction, your interests are the last to be considered. The finance companies are only interested in getting their money out. You could and probably will lose everything. In this market finance companies panic and will take big losses on there loans just to quit them.


• Other strategies that can be tried are swaps and trades. Try advertising to trade down. Offer to trade your home for a cheaper property that may be smaller or in a less desirable area. Do not be too fussy, the idea here is to protect your money. You can always sell again when the market picks up.

  Get creative. Maybe you can trade a car or a small business as part payment. One homeowner traded a shop full of garden ornaments as a down payment on his house that was difficult to sell. It was fairly inconvenient but it worked for both parties.

Whatever you do, avoid waiting until auction day, thinking that it may never happen. Get proactive. Find the best-selling real estate agent in your town and get his or her advice.

With a realistic selling price and enthusiastic marketing campaign, you can decide if it makes sense get your house sold while you can still salvage your equity and move into something more affordable.