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12 Strategies to Avoid Foreclosure

Facing foreclosure can be overwhelming, but several strategies can help protect your home and finances. Explore twelve practical options, with the pros and cons of each approach, to find the best solution for your situation.

1
Graphic of a handshake representing getting a personal loan from a family member.

Get a Personal Loan from a Family Member

Borrow funds from a family member to catch up on mortgage payments.

Pros

  • Quick access to funds
  • Possibly lower interest rate
  • Flexible repayment terms
  • No credit check

Cons

  • Potential strain on family relationships
  • May not be a large enough amount
2
Image of a real estate agent with a 'For Sale' sign, representing listing property with an agent.

List Your Property with an Agent

Hire a real estate agent to sell your home on the MLS.

Pros

  • Professional marketing and exposure
  • Expertise in pricing and negotiations
  • Legal and paperwork assistance

Cons

  • Agent commissions (5%-6%)
  • May take time to sell
  • Preparation and staging costs
3
Illustration of a contract with a pen, symbolizing the process of modifying a loan.

Get a Loan Modification

Negotiate with your lender to change the terms of your loan to make payments more affordable.

Pros

  • Lower monthly payments
  • Retain ownership of your home
  • Potential for reduced interest rate

Cons

  • Lengthy and complicated approval process
  • No guarantee of approval
  • Negative impact on credit score
4
Illustration of a house under renovation, indicating the process of renovating and listing property for sale.

Renovate and List Your Property

Invest in home improvements to increase your property's value before listing it for sale.

Pros

  • Potential to achieve a higher selling price
  • Attract more buyers

Cons

  • High upfront costs for renovation
  • Time-consuming process
  • Risk of not recouping investment
  • Requires knowledge of market trends and buyer preferences
  • Need construction skills or contractor management
5
Image of a house with a 'For Rent' sign, depicting turning a house into a rental property.

Turn Your House into a Rental

Rent out your property to generate income and cover mortgage payments.

Pros

  • Generates rental income
  • Can cover mortgage payment
  • Retain ownership of your home
  • Potential for long-term appreciation

Cons

  • You may still need to come up with initial funds to get out of arrears.
  • You need to find, and pay for, a new place to live
  • Requires management and maintenance
  • May need repairs and updates to attract tenants
  • Rental income may be insufficient to cover costs
6
Graphic of various household items for sale, symbolizing selling personal belongings.

Sell Other Stuff

Sell personal belongings or assets to raise funds for mortgage payments.

Pros

  • Quick infusion of cash
  • Declutter your home

Cons

  • May not raise enough money
  • Emotional attachment to items
  • It takes time and effort to sell items
7
Icon of cash bundles, indicating selling your house quickly for cash.

Sell Your House with a Cash Offer

Sell your home quickly by accepting a cash offer, often from investors or cash buyers.

Pros

  • Quick sale process
  • As-is sale, no need for repairs
  • Immediate access to funds

Cons

  • Typically, lower offers than market value
  • May still incur closing costs
  • Limited negotiation leverage
8
Image of a contract with a house icon, representing selling a house with creative financing options.

Sell Your House with Creative/Seller Financing

Offer financing to the buyer directly, allowing them to make payments to you instead of a bank.

Pros

  • Potential for higher selling price
  • Can rebuild credit score
  • Can generate passive income
  • Can close quickly

Cons

  • Complex legal and financial arrangement
  • Risk of buyer defaulting on payments
  • Requires ongoing monitoring
  • Limited immediate cash
9
Illustration of a government building with a dollar sign, representing government assistance programs.

Apply For Government Assistance Programs

Explore <a target="_blank" rel="noreferrer" href="https://www.oregon.gov/ohcs/homeownership/pages/foreclosure-default-prevention.aspx">federal and state programs <span aria-hidden="true">&#8599;</span></a> designed to help homeowners in distress, such as the Home Affordable Modification Program (HAMP) or other local initiatives.

Pros

  • Access to financial assistance
  • Programs are specifically designed to prevent foreclosure
  • Potential for loan modification or refinancing options

Cons

  • Lengthy application process that's not guarenteed
  • Eligibility requirements
  • Limited availability of funds
10
Illustration of a counselor providing advice to a homeowner, symbolizing consulting a housing counselor.

Consult a Housing Counselor

Seek advice from a <a target="_blank" rel="noreferrer" href="https://www.foreclosuremediationor.org/Content/Site/558/index.html">HUD-approved housing counselor <span aria-hidden="true">&#8599;</span></a> who can provide guidance on available options and assist with negotiations with the lender.

Pros

  • Expert advice and support
  • Assistance with lender negotiations
  • Free or low-cost services

Cons

  • Limited influence over lenders
  • May not be able to resolve complex financial issues
11
Graphic of a piggy bank and a retirement fund document, symbolizing borrowing from retirement savings.

Borrow from Retirement Savings

Withdraw funds or take a loan from retirement accounts to cover mortgage payments.

Pros

  • Immediate access to funds
  • Potential tax advantages for loans

Cons

  • Penalties and taxes on early withdrawals
  • Reduces retirement savings
  • Potential long-term financial impact
12
Graphic of legal documents with a gavel, indicating the process of filing for bankruptcy.

File for Bankruptcy

Seek legal protection through bankruptcy to halt foreclosure and restructure debts.

Pros

  • Automatically halts foreclosure process
  • May discharge certain debts
  • Potential to keep your home
  • Structured repayment plan

Cons

  • Severe impact on credit score
  • Public record of bankruptcy filing
  • Legal fees and court costs
  • Long-term financial consequences

These twelve strategies offer viable paths to avoid foreclosure and protect your home. Each option has unique advantages and challenges, so choosing the one that best fits your circumstances is essential. If you need personalized guidance or support, contact us to discuss your options and secure your financial future.