How to Save Your Home From Foreclosure

How to Save Your Home From Foreclosure

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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.

How to Save Your Home From Foreclosure 1
Photo by Respres via Flickr

If you find yourself in this situation, what would you do?  You might consider walking away from your mortgage 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:
  • Pay less for things that you do need:
  • 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.

9 thoughts on “How to Save Your Home From Foreclosure”

  1. I think these are some great ideas.

    Some of them, to me seem obvious (scaling back on spending). Refinancing is a great way to get out from under a bad mortgage.

    I love the extra money ideas. renting out the garage is a wonderful idea I never would have thought of!

  2. Thanks for the link Pinyo and for the additional great tips here. I think cutting out all unnecessary expenses is a great start and adding a roommate would generate some extra income that could be utilized to fight foreclosure.

  3. @Colombian — Refinance will only work for some homeowners. If they’re already upside down on the loan, which I suspect many are, refinancing will not work….unfortunately.

    @David — Thank you.

    @Scott — You’re welcome and thank you for putting together a good thought starter.

  4. Foreclosure is horrible and it’s about being creative with your skills, talents or making cut backs. I agree about cancelling none essential items and savings as much as you can but even then there is only so much you can cut back upon. It’s also about understanding and using any skills that you have, such as painting, drawking, DIY or professional skills and trying to turn these into money making ventures to supplement your income and keep paying the mortgage

  5. This is some great tips, it is easy said than done. Most will not be able to modify the loan or trade down on the vehicle if they have bad credit (high interest).

  6. The ideas are good & I think most people facing foreclosure have done this. The banks are not helping people,in fact they are profiting off middle class homes & given special treatment to those who have million dollar homes where many have been allowed to go two years without paying a house payment. The Government Loan Remodification Plan I have been told is really a scam in that if approved, the rate only drops for a temporary period & then will lock in based in on a percentage of your salary, so hypothetically, you could end up with a higher interest rate than when you started.Others have speculated that the banks are on a land grab gearing up for another Government Bail-Out. The President nor Congress has really done nothing to help homeowners and at the current foreclosure rate in this economy could force the economy into an full collapse of a depression worse than the Great Depression.Analyst are saying that even if the economy turned around tomorrow, that we are looking at 5 years to see a full recovery.PEOPLE NEED TO START DEMANDING THE PRESIDENT & CONGRESS TAKE ACTION NOW TO GET A REAL BILL TO HELP HOMEOWNERS, CREATE OVERSIGHT OF THE PROCESSES, AND ENSURE BANKS ARE NOT TAKING ADVANTAGE OF PEOPLE.WELLS FARGO WAS RATED THE SECOND WORST BANK FOR HELP HOMEOWNERS.

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