If you’ve been unable to afford your mortgage payments, a foreclosure might be on the horizon. A foreclosure is a legal process when your mortgage lender takes over your home. Your foreclosure might feel set in stone, but it’s actually a pretty lengthy process that leaves some flexibility. The good news is it’s not too late to take action. As long as you’re still in the early stage of foreclosure, there’s time to find a solution. Foreclosure has a harmful impact on your credit and homebuying prospects in the future, so you want to avoid this outcome at all costs. 


The longer you wait, the less time you have to solve the problem. While it might seem like your mortgage lender is the enemy in this situation, they’re actually your lifeline. In fact, 6 out of 10 homeowners who are delinquent in their payments aren’t even aware of the services lenders have to offer those struggling. 


Lenders want to get paid. They know their homeowners experience financial challenges. Most likely, they’ll be willing and able to work with you to create a solution that works for both parties. Here’s how to deal with your lender when you’re going into foreclosure on your property. 


1. Know Your Rights

First, you need to educate yourself about your mortgage rights. Start by reading through your loan document. You might need to learn more about some of the common mortgage terminology to make sense of this agreement. 

From there, learn about your state and local rights. Every state has different laws when it comes to foreclosure. You’ll need to educate yourself about these and their timeframes, so you know what your lender’s options are if you’re unable to continue making mortgage payments. You can find this information on your state’s housing office website. 


2. Talk To Your Lender

Your first line of defense after learning about your rights is simply to talk to your lender. It’s tempting to ignore the problem and to put off taking action, but the longer you wait, the fewer options you have. 

Open all mail and answer the calls from your lender. They want to get paid, and they’re likely willing to work with you in finding a compromise. Until your home is scheduled for an auction, there’s room for compromise. 

Call your lender and ask if they have options for repayment assistance. They might be able to allow you to make interest-only payments for a while, or they might direct you to federal programs for housing assistance. You have options, but you need to be open with communication. 


3. Consider a Short Sale

If you’re unable to work out a compromise with your lender, you might want to consider a short sale. A short sale is when you sell your property for less than the amount owed on the mortgage in order to repay the lender. While your lender doesn’t have to accept this offer, they must consider it if you do get an offer from an interested home buyer. 

Because your lender is just going to sell your home once it’s turned over to them, a short sale is a way to save them time without having to foreclose your home. However, navigating a short sale isn’t always easy. Be sure you’re ready to take on the process before you list your home. 


4. Find Additional Income

You might be able to find additional income to keep your home. While having an additional job or side hustle isn’t always possible, you can always rent out your home. Having a renter in your space is an effective way to make an income to put towards mortgage payments. 

Depending on the size of your property, you might be able to rent only a single room. In other cases, you might need to live elsewhere while you rent the entire home. Once again, make sure you fully understand the responsibilities of becoming a landlord. 


Avoid Foreclosure with These Steps

Unfortunately, it’s not always possible to escape foreclosure. If the above steps don’t work for your situation, it might be time to consider filing bankruptcy. Bankruptcy will stop your foreclosure in its tracks, but you’ll still be on the hook for your mortgage debt. 

The best solution is to simply communicate early and often with your mortgage lender. This will place you in a good position to compromise in some way. Alternatively, look into local and federal assistance programs that can fill the gaps in income. If you’re facing a mortgage, you aren’t out of options. Just make sure you’re proactive and take advantage of the lifelines offered to you.