“Foreclosure” is a four-letter word to any homeowner. The thought of losing a home to foreclosure is scary, and any homeowner would do whatever possible to avoid this predicament.

What is foreclosure, exactly? Legally, if homeowners continually miss mortgage payments, the lender can repossess the property. This is foreclosure, and it means the homeowner must give up the house. Not only that, but foreclosure can critically affect a person's credit rating, sometimes preventing any future credit opportunities. Because of this, foreclosure should be avoided if at all possible.

If you are having difficulty paying your mortgage, communicate this with your lender. Chances are you may qualify for assistance, or there may be another loan better suited to your needs. Another way to prevent foreclosure is to work with a housing counseling agency; Housing and Urband Development (HUD) can refer you to a reputable agency in your area. (Call 800-569-4287 for more information.)

Some alternatives to foreclosure include special repayment plans, temporary suspension of mortgage payments, and mortgage modification. These all depend upon your financial status and require you to furnish complete proof of both income and debt. Another possibility is pre-foreclosure sale. Pre-foreclosure sale enables you to sell your home for a lower amount than you have left on your mortgage. You will still owe the remainder of your mortgage loan; the benefit is that you will avoid foreclosure and save your credit rating. If none of these options works for you, you may pay your lender the deed for your house in lieu of foreclosure. While you still lose your home, your credit rating will not suffer as greatly as if you went through a foreclosure.

Be wary of scams. Only a professional can truly determine if you are qualified for these options to avoid foreclosure. Make sure you get everything in writing, and only sign if you understand the paperwork. It is possible to avoid foreclosure if you make wise choices and understand your rights. Just be careful not to fall prey to scam artists. The outcome may be worse than foreclosure alone!

Your best bet to avoiding foreclosure is to work closely with your mortgage company and/or a lawyer.

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