How to stop foreclosure and save your credit rating

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There are essentially three ways which someone can stave off the loss of their home and all of their valuable equity due to foreclosure.

1. Mortgage Refinancing

However, this option for some maybe not be viable if their home has a relatively new loan possibly without sufficient equity to satisfy the lender's necessary (LVT) loan-to-value requirement. In fact most lenders would like all loans on your home to be no more than 65% of its value. Obviously the lower the figure the better your chances are you'll be approved for a new loan, providing your credit and income is sufficient.

2. Short Sale

A Short Sale basically means that your lender agrees to discount your mortgage balance so that your home can be sold which normally takes place relatively quickly once the banks loss mitigation department approves the short sale. In other words, the home is being sold short of its original foreclosured loan balance. And therefore because your home will be purchased by either an investor or an owner-occupant your foreclosure is adverted and therefore your credit is saved.

However, this option doesn't always work for a number of reasons. If you have already received notice of your property's auction date or if the lender's loss mitigation department is unwilling to work with you or your representative then unfortunately you maybe up against the worse case scenario.

3. Loan Modification

Due to your home's impending auction date when you and your family's home is in foreclosure time is truly of the essence. Therefore as difficult as it may be for you and your family to decide as to how to handle your foreclosure whatever decision you decide upon has be done quickly.

As long as you havent received an auction date applying for a loan modification may actually be your best bet. A loan modification, also know as a loan-work-out or loan forbearance is achieved when your lender decides after careful consideration of your current financial situation that it would be best to basically rework your loan rather than proceed with taking your home in foreclosure.

I'm sure you've heard it said that banks are not in the business of warehousing homes? If they were to take your home and every other home whose loan they service in foreclosure they would literally loose millions of dollars. Notwithstanding their tough legal stance, taking your home is the absolutely the last thing they want to do.

That being said, your lender not only won't take the initiative to resolve your foreclosure, leaving that to you, it will also be resistant to your attempts at a short sale request or a loan-work-out agreement. That is precisely why you should have a reputable Loss Mitigation Company represent you during your negotiations. Loss mitigation companies have the resources and contacts on the inside at all of the nation's largest lenders. And its because of these already established relationships that they are able to get loan modifications approved much quicker than you could even if you knew how to handle the process on your own.

Article Source: http://depositarticles.com/

Sidney R. Shannon operates a blog called "The Loan Modification Man" where he shares tips and insider secrets on how to get a loan modification done quickly and professionally. Visit How to stop foreclosure and save your credit rating.

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