Monday, October 09, 2006

Foreclosures - Take Action Early

If you’re looking at the potential for foreclosures, the worst thing you can do is take a “wait and see” attitude.

In fact, the earlier you can start talking to – and negotiating with – your creditors, the better.

Start early actually means that you should contact the person or company that holds the title to your property as soon as you think you may be in trouble. It’s tempting to avoid the problem to the point of not answering the telephone when those creditors call, but that’s not going to solve the issue. In fact, creditors who aren’t getting answers or satisfaction are more likely to take action than those with whom you’ve been talking.

Another reason you should start talking to your creditors well before foreclosure becomes immediate and unavoidable is that you have more options at that point than when the creditor is already taking action. One of those options could be the chance to renegotiate your loan. You might be eligible for a refinancing loan that will stretch your payments out over a longer period of time, meaning you’ll have lower monthly payments. That could significantly increase your ability to make those payments on time. Not only could you be eligible for a longer payoff, you may also qualify for a loan that’s larger than your current payoff. That means you could get some cash back from refinancing your loan. If you’re having trouble meeting other bills as well because of some short-term issue, this influx of cash could be the answer you’re looking for.

If you take time to contact your lender, you may also find them willing to give you a break on a payment or two. Some lenders will allow you to pay the interest due, putting the rest of the payment off until the end of your note. While you probably won’t have the option to do this more than once or twice, it could be the answer to short-term problems that sometimes hamper the ability to make payments on time.

It’s human nature to avoid confrontations, including those that occur when you’ve had trouble making your payments on time. But this isn’t a situation that’s going to resolve itself. Take time to contact your lender. Explain as much of the problem as you can and ask for advice. You’ll find them much more willing to negotiate with you early in the process than after you’ve missed several payments. Dave is the owner of and websites that provide information on home foreclosures

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