How To Save Your Home From Foreclosure

Recently, Passive Dad asked me about free creative ideas to help friends facing foreclosure.  This is a timely topic since one factor that contributes to the current economic crisis is the rise in foreclosures. Basically, the teaser rate on many adjustable rate mortgages end, and homeowners found themselves unable to afford the new higher mortgage payment.

Photo by Respres via Flickr

If you find yourself in this situation, what would you do?  Some will simply walk away knowing that it’s not worth the effort — i.e., too far upside down, bad mortgage term, or not enough money to save the house. However, there are many who are teetering on the brink of foreclosure and are willing to do whatever it takes to save their homes.

Here are over 30 ideas to help those who are fighting foreclosure:

• Talk to everyone that’s living in the house — you’re either in it together, or you all will be out of it.
• Talk to your close friends and family for support (not the financial kind).  This will also give them the opportunity to understand why you don’t go out with them as often, or can’t spend a lot of money on gifts.
• Talk to your lender to see if they are willing to work restructure the loan or give you some options.
• Try to refinance your home loan and ask if you qualify for FHA home loan.
• Cancel services that you don’t need without paying unreasonable penalty:
  • Cable or satellite television.
  • Cell phone or home phone (I think you’ll need at least one).  Here’s a good article on how to end your cell phone contract without paying penalty.
  • Magazine and newspaper subscriptions.
  • Gym and club memberships.
• Pay less for things that you do need:
  • Use NetQuote to find lower rate for your home, car, and health insurances.
  • Negotiate with all of your service providers — e.g., doctors, phone, utilities, internet, cable, etc.
  • Shop online using rebates, discount coupons, cash back reward, and price protection.
  • Clip coupons and buy stuff when they are on sale.
  • Ask your friends and family for hand me down items.
  • Join Freecycle.org and get stuff for free.
  • Increase your insurance deductibles (a reasonable amount).
• Sell extra stuff that you don’t need:
  • Sell your extra car, or trade down your car.
  • Sell used books and textbooks.
  • Sell anything that has some value, but that you’re not using (or haven’t used in a long time).
• Save money wherever you can:
  • Brown bag your breakfasts and lunches.
  • Stop eating out, or eat out for less.
  • Find less expensive and more healthy alternatives — e.g., replace bread with rice, eat less meat, cut down on sodas, etc.
  • Stop expensive habits — e.g., smoking, drinking, etc.
  • Stop spending money on expensive hobbies, and find less expensive or free alternatives.
  • Cut all non-essential purchases.
  • Put all big purchases and vacation plans on hold.
  • Exercise and stay healthy
• Find ways to earn more money:
  • Read my Extra Income Guide.
  • Get a second job, or volunteer to work overtime.
  • Rent out your garage or driveway (works well in big cities).
  • Rent out a room or two — hey, whatever it takes right?
  • Ask your parents or children to move back in with you.  This could be tough, but you could make it a win-win for everyone — i.e., you charge them less than what they are currently paying for rent.

Some of these are a bit extreme, but desperate situation calls for extreme measures.  You may lose your pride and some privacy, but you get to keep the house.  It’s up to you to decide what is truly important in life.

If you have specific ideas not mentioned in this article, please chime in and help our friends who are fighting foreclosure.

• Visit HUD’s Guide to Avoiding Foreclosure — Dawn