How to save your home from a possible foreclosure

Many people feel lost when they have gone behind in their mortgage payments and are expecting their house to be foreclosed anytime soon. Thousands of Americans are in the same situation during the time of crisis in sub prime mortgage, rising interest rates and a prevailing tough economy.

Here are a few pro-active things to do to save your home from a possible foreclosure if the bank has already sent you a warning letter or are expecting to get it soon.

Apply for a forbearance: It will be a good idea to get in touch with your bank and explain them about your present financial situation if you are finding it hard to make the monthly payments. Most of the banks will be willing to work with you if you have been making timely payments to them in the past. They will offer you extensions to make the payments at reduced interest rates, or suspend payments for a certain period of time until you’re back on your feet.

Mortgage modification: Another proactive option will be to modify your existing mortgage payment plan. You can always ask the lender to offer you different plans on lower interest rates. This is similar to refinancing and you don’t have to get another lender involved or credit to qualify.

Died in lieu of foreclosure: This may be the best option for someone who is struggling hard to make the payments on his mortgages. By doing a died in lieu, the homeowner hands over the home deed to the lender and walks away. This helps the lender to save their credit, and the lender avoid the costs involved in a foreclosure process.