Foreclosure is a process in which the bank takes your home from you, as collateral for not paying off your loan. This can be a very strenuous process for homeowners and comes with many problems. Most homeowners think that lenders are the enemy—in reality, most of them want to help you avoid going through this process. These are some of the main mistakes that homeowners make during foreclosure.
1. Screening calls: Your lender will try to contact you many times throughout the foreclosure process. Not answering the phone or door for your lender is the worst thing you can do; this is because you may miss the opportunity to save your home, or, force your lender to speed up the foreclosure process.
2. Not attempting negotiation: Most homeowners think that if they miss their payments, foreclosure will come eventually. Know that lenders aim to avoid foreclosure. Sometimes they will offer to restructure your loan to help you avoid foreclosure.
3. Not considering alternatives: If you file Chapter 13 bankruptcy, you may be able to stall the foreclosure process; you might also be able to even keep your home by getting on a payment plan for your other debts and mortgage payments. Don’t make the mistake of not exploring your possibilities to avoid foreclosure, because there are possibilities.
4. Neglecting your property: Many people stop maintaining their property when they have issues paying their mortgage, as they think the home is going to go through foreclosure anyway. This is not a good plan, if the bank closes on the house, you will be stuck with the money on home repairs. Aside from the fact, that, if you have followed step 3, you have a possibility of saving your home—and if you do, then you are stuck with the aftermath of not maintaining your property.
5. Vandalizing: Some homeowners will vandalize the home out of spite to the bank; this vandalization can include stripping pipes, stealing fixtures, and stealing appliances. This resorts to serious legal consequences.
6. Short sale: A short sale should be considered, if all other options are exhausted. If you find a buyer who is willing to buy your home, even for less than what is owed, you can still present this offer to your bank and they may accept the money as full payment. Don’t expect your credit score to rise—it will be a detriment; however, you will avoid the legal implications that come along with foreclosure on a home.
7. Not saving: Just because you know your home is about to be foreclosed on, you should still be saving the money that was going toward your mortgage; obviously, you will need to find another place to live. You are going to have problems with this already, as your credit will not be so great from a foreclosure on a house added to it. Begin saving while you are exploring your options.
8. Avoiding facing reality: Many homeowners are in denial when it comes to foreclosure; this is why many run out of time to find a place to live, and move their things.
In conclusion, if you are facing foreclosure it is critical to work with the bank, seek legal council, exhaust all options before closing in the towel, and if all else fails, it is best to accept the situation and start saving money planning ahead of time to move. For further reading, see this article on Foreclosure Mistakes.