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Avoid Foreclosure With These 5 Tips

It's no secret that America's housing market is suffering; some neighborhoods are rife with signs pointing out foreclosures and short sales.

If you're in danger of losing your home, check out these prevention tips to avoid foreclosure.

With just a few tweaks, you may be able to save your home and your credit.

Tip 1: Total Your Spending

From your grocery bills to student loans, determine how much you're spending each month and find out what, if anything, can be cut out.

You may find that a few hundred dollars is separating you from your mortgage bill.

Once you figure out how your income balances out with your spending, you'll have a better idea of what to ask from your lender.

Tip No. 2: Reach Out To Lender

If you find that you can't cut out any spending to afford your mortgage bills, talk to your lender to find out if they have any loan modification programs available.

The government's Making Home Affordable plan may not apply to your situation, so be sure to check with your lender first.

Tip No. 3: Research Your Loan

Look for the paperwork that went with your original loan -- hopefully it's in your desk somewhere.

Then find out: do you have a federally-backed loan? Is your loan based on principle or interest? The Fannie Mae and Freddie Mac sites allow you to search your address to find out if one of them owns your mortgage.

You may discover that you were approved for the loan although your income didn't match up, or other inconsistencies that may help your case for a loan modification.

Tip No. 4: Write Hardship Letter

If your lender allows you to start a loan modification, you will likely need to provide a hardship letter along with a list of your spending and proof of income.

The best advice for writing the hardship letter is to be honest. Explain why you are unable to afford your home and be straightforward with your request.

Be sure to turn in all your paperwork on time, otherwise your loan modification request may fall through the cracks.

Tip No. 5: Do the Math and Ask for the Terms you want

See if you are eligible for a loan modification, and then see if you can actually afford the lowest possible payments you could get.

Many non-profits including NACA and HUD counselors have to take on all people who apply for a loan modification, whether they make too little money or too much money.

This may not be a good thing for you because they don't have to tell you that you make too little or too much money.

The non-profits have to help all those who seek help, without ever doing the math to see if a modification is even feasible.

It helps to be prepared by having the right terms to propose to your state mediator or housing counselor by doing some math first and then seeing if these terms are more profitable to your lender than foreclosure.

March 28, 2011 Portions of this article are Copyright 2011by KCRA.com.

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We can help you stop foreclosure with a loan modification in the following states:

If you need help understanding your option of taking advantage of the home loan modification process, the help is available to you everywhere. The process is quite tricky and it is highly recommended that you do indeed seek legal advice before signing on the dotted line, in order receive the most efficient and cost-effective modification to your mortgage payment.

Where do I get Advice
There is advice all over the web on how to receive a loan modification; some of this advice is quite helpful, while some is quite dreadful. There is also the opportunity to hire a professional service that will help you go through the paperwork and work with the lender to help you get all the benefits that you deserve, due to a hardship. Loan modification is a process that must be understood completely and thoroughly. This article can actually offer you an insight on the process of loan modification and tips that will better help you as a homeowner save your home from the risk of a foreclosure.

Loan Modification Advice
First and foremost, it is important to determine if you are eligible for a loan modification. This requires writing a letter of hardship explaining to the lender what exactly the reason is for your late payments and the fact that you are unable to pay your mortgage. Doing a loan modification on your own requires more than just advice. Becoming educated about the process is more important. This is perhaps a good reason to hire a professional loan modification company to take part in the process. They will handle everything for you, while educating you in the progression. There is a fee charged for hiring these companies, but in turn your mortgage payment can be lowered quite a bit and professionals can even find things in your original loan papers that may prove that the lender may have broken the law during your original mortgage signing.

If you do choose to take the big leap of the loan modification process on your own, you must first contact the lender and they will lead you to the correct department, normally the loss mitigation department. You may not want to directly say that you are in the process foreclosure. We do not want the lender to think your situation is not worth their time before hearing you out. Always document anything relating to the loan modification process, every phone call and any other information you may receive during the process must be documented. Always discuss every option available with your lender, so that you may come up with the best alternative for you. It is true you will save money going directly through your lender and let’s face it, you are struggling already trying to make your payments, but professional assistance can help immensely.

No matter what direction you decide to take, loan modification will be what determines the amount of time you have in your home. If you are eligible you should act as soon as possible.

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