Foreclosures can often be prevented . . . first by working with your mortgage company, especially if you are in a temporary situation that is causing financial difficulty. CALL THEM AT THE FIRST SIGN OF DIFFICULTY. They really do not want the property back -- they probably have plenty on hand right now -- and they will usually work with you if they can!
Secondly, if you do not think your situation is going to change in such a way that will allow you to stay in your home . . . if it is going to continue to be a financial burden for you . . . and don't think for a second that you are in the boat by yourself! . . . then contact a Realtor as soon as you see difficulty and hardship coming. Some homes, especially those with some equity, can be sold BEFORE foreclosure becomes a threat. Therefore, you may walk away from the closing with some of your equity PLUS keep a foreclosure off your record PLUS keep your credit in better standing. Even if your home is in bad shape and needs a little or a lot of TLC -- there are Buyers who want to purchase a property to fix up. These are the homes I really hate to see in foreclosure because I know the owner could probably have sold it before it was foreclosed on. Even if it is sold to an investor who fixes it up and sells it for a profit, that's still better than letting the bank have it back. After the bank gets it back, they will likely do the same thing anyway -- sell it to a homebuyer looking for a good deal or to an investor who will fix it up, make repairs and sell it for a profit. So, it may be better to look at it as a financial or business decision and not let emotions get in the way (not wanting to let a buyer benefit from your unfortunate situation).
I am currently working with investors who are interested in purchasing properties that need work -- whether it means helping someone out of a bind or purchasing a home from heirs that do not have time to fix up a property to sell or for numerous other reasons.
If you haven't owned your home long enough to have built up equity, your bank may still work with you on a short sale.
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