Debt Consolidation Credit Counseling In Phoenix

If you find yourself facing foreclosure, there are probably several contributing factors, which have led to your situation. You might have lost your job, suffered an illness (and its accompanying medical bills) or been through a divorce. However you get here, one thing is certain; the bills are piling up and it is getting harder and harder to make ends meet. Even worse is the situation of having an adjustable rate mortgage whose interest rate has skyrocketed, making your payments much larger.

Unfortunately, while you're worrying about stopping foreclosure of your home, you're bombarded with letters, postcards, phone calls and strangers driving by and knocking on your door.

These investors are in the business of buying homes from people who are in danger of losing their homes to foreclosure and then selling these properties for a profit. They know that many people who are facing foreclosure have no alternative other than to sell their home for whatever price they can get.

Should you sell to an investor to avoid being foreclosed on? Maybe, but certainly not as your first option. And only after you exhausted other foreclosure prevention means such as rearranging your loan.

Rearrange Your Loan To Stop Foreclosure

Once you have missed a couple of payments, your credit rating will begin to be affected your credit score will likely drop considerably, which will make it extremely difficult to refinance your current loan.

Every lender has what is known as a loss mitigation department, whose purpose is to limit the potential losses, which could be faced by the lender on their loans. Part of their duties are to arrange payment plans with homeowners whose mortgages are in default to get them current with their payments again. This process of working with the loss mitigation department does not require getting approval for a new loan, which makes this an attractive alternative for those who are in default on their mortgages.

A Repayment Plan May Still Be Challenging

Loss Mitigation departments are lightly staffed. One of the biggest problems with workout plans is caused by employee overload. At time of high default rates, like we're experiencing now, the employees have too many files to work on. And they have a limited time to process each case. The result is, the lender offers you a 'canned' repayment plan that has too short of a 'catch up' time and too large of monthly payment increase that is not realistic for your budget to sustain.

With the difficult situation you are in, you may be tempted to take this repayment plan offered to stop foreclosure; however, this is generally just a short-term solution. Since the terms of the repayment plan are not a realistic fit for your budget, you will as likely or not be facing foreclosure again in a matter of months.

Watch Out When Hiring Workout Professionals To Stop Foreclosure

One of the simplest, yet little known ways to get a lot better outcome through the Loss Mitigation process is to hire an experienced professional to do the work for you. These are companies that have experience of negotiating literally thousands of workout cases for owners in default. Some have established working relationships with the Loss Mitigation departments of many mortgage lenders nationwide.

These companies will look over your finances and help you come up with a repayment schedule, which is possible for you to meet; payments will be kept as low as possible to make it easier for you to make your payments. These companies have intimate knowledge of the programs offered by different lenders and can negotiate a better deal for you than you would be offered by the lender on your own. They may even be able to negotiate a lower interest rate on your mortgage, which will lower your payments.

You may think that these services will be too expensive, given your financial difficulties; however, most of these services charge a low flat fee, usually about a months payment. With the money and time these negotiations can save you, they usually more than pay for themselves? They can often even negotiate a deferral of your next payment.

You May Consider Cutting Your Losses

If stopping foreclosure through loss mitigation isn't in your plans, then it's time to sell your home so you don't have a foreclosure record on your credit. If you have a lot of time before the foreclosure sale, then list your home for sale with a real estate agent. This way you will get more for your property. If you're out of time, now you may have to turn to investment companies that can buy quickly. Just make sure you're dealing with a company that has means and track record to perform and close the purchase fast.