How to Take Control when Foreclosure Looms - dummies

How to Take Control when Foreclosure Looms

If you sense that your financial situation has taken a turn for the worse and foreclosure may be on the horizon, deal with possible foreclosure as best you can. You and the rest of your household need to work together to keep the problem from getting worse.

  • Freeze your finances. When foreclosure strikes, the first order of business is to get a handle on your finances. Do whatever possible to keep more cash flowing in than flowing out — boost income with overtime or a second job, slash unnecessary expenses, and sock away as much money as possible.

  • Prioritize your bills. Part of the process of stabilizing your current situation is prioritizing your bills. So, when you’re facing foreclosure, pay your bills in this order:

    • Property taxes

    • Secured debts

    • Homeowner’s insurance

    • Utility and grocery bills

    • Unsecured debts

  • Know who to contact. Your most valuable assets in foreclosure are people who can assist you, so draw up a list of people you can lean on, including friends and relatives, a bank representative, and a foreclosure attorney.

  • Gather important documents. The most important foreclosure-related legal documents are

    • Mortgage, deed of trust (if you purchased your home through a bank), or contract for deed (if the seller provided financing)

    • Modifications to the mortgage or promissory note

    • Deed

    • Notice of default

    • Sheriff’s or trustee’s deed

    • Canceled checks

    • Bank statements

    • Listing agreement

    • Current appraisal

    Keep anything else you think may be relevant. Having more than you need is better than needing something later and not having it.