Preventing Foreclosure: How to make sure you keep your home

There is more than one way to prevent foreclosure, but you should always take the necessary steps before the foreclosure process is initiated. It is possible to stop a foreclosure that has already started, but it is much easier to stop it before it ever starts. You can use any one of these methods to stop foreclosure, but you should also try to set up a repayment plan or ask for a refinance if foreclosure is inevitable.

*Short sales are a great way to stop a foreclosure if you owe more than your home is worth. If you opt for a short sale, ask your lender if they can take less than you owe. If the lender accepts your offer, you sell your home for the specified amount and the lender forgives the balance. The biggest drawback to the short sale is its adverse effect on your credit, but it is still not as bad as a foreclosure. What's more, the forgiven debt may be declarable as income and you will have to pay taxes.

*You can stop a foreclosure by signing a deed. To use this method, you'll need to draw up and notarize a deed, which in essence signs the home back over to the lender. In turn, the lender forgives the debt. As with other methods, there are no guarantees, and the negative effect on your credit is the same that comes with a foreclosure.

*If the foreclosure has not begun yet, you should immediately call your lender and ask how you can prevent it. In many cases, the lender does not want a foreclosure any more than you do, because they rarely actually want to repossess your home. Foreclosures are expensive and time-consuming for both you and the lender. Many avoid talking about foreclosure with their lender, out of fear or embarrassment, but most lenders are willing to work with their borrowers.

Your lender can do a lot to help you avoid foreclosure; they can arrange a payment schedule or help with the refinancing of your mortgage. They may also forgive past-due payments, or offer a lengthy extension. Loan modification is a good option, where you will make some payments to prove that you can in fact afford your home. In modification, you will get a lower interest rate and monthly payment. Whether you are in foreclosure, or it's on the horizon, you should go over your options with your lender.