What is foreclosure?

Missing a house payment by a few days won’t put you in danger of foreclosure. If you end up making the payment shortly after the due date, let your mortgage lender or servicer know it was paid, albeit late.

If you still haven’t paid by the end of the grace period, however (usually 10 to 15 days), your mortgage lender has sent you past-due notices or you’re multiple mortgage payments behind, you need to act quickly to get your mortgage back in good standing and prevent foreclosure proceedings.

While you might want to seek legal advice before going any of these routes, here are some of the best ways to prevent foreclosure:

1. Don’t ignore the problem

At the first sign of financial trouble, contact and inform your lender. Doing so gives the lender an opportunity to share possible solutions available to help you avoid foreclosure. Plus, connecting with the lender right away to remedy the problem could mean getting back on track with your loan payments sooner. But if the foreclosure process has already begun, there are other strategies to stop it.

2. Mortgage forbearance

Mortgage forbearance is an option that can help homeowners prevent foreclosure by temporarily pausing or reducing mortgage payments during financial hardships. But the forbearance process isn’t automatically implemented. First, you must reach out to your lender or its loss mitigation department to request forbearance and provide proof of the financial hardship you’re experiencing. Not everyone will qualify.

3. Mortgage repayment plan

If you suffer a short-term financial setback (such as expensive car repairs or a medical emergency), your lender might provide some breathing room by agreeing to let you pay off your missed payment in two installments over the next two months.

4. Loan modification

Mortgage servicers can permanently adjust the terms of your loan — most often by lengthening the amortization schedule, lowering the interest rate or rolling the delinquent amount into the loan and re-amortizing the new balance — to help you bring the loan current. Loan modification might not reduce your principal owed, however.

5. Deed-in-lieu of foreclosure

A deed-in-lieu of foreclosure involves turning over your home to a lender to avoid foreclosure proceedings. In some instances, going this route could help you avoid paying the remaining loan balance on your mortgage, but that depends on your lender’s rules and the state you live in. Before you get a deed-in-lieu of foreclosure, ask your lender if it will waive any deficiency, which is the difference between your home’s value and what you still owe on the mortgage. (If there is a deficiency, the lender could seek a judgment to try to collect even after you’re out of the home.)

6. Short sale

A short sale happens when the lender allows you to sell the house for less than the outstanding loan amount, takes the proceeds and forgives any remaining debt. A short sale could help you salvage some of your equity, but the lender has to approve it first. A real estate agent with experience in short sales might be able to help you find a buyer and guide you through obtaining the necessary approvals.

7. Short refinance

With a short refinance, the lender forgives some of your debt and refinances the rest into a new loan. This type of refi was more common in the aftermath of the mortgage crisis and might not be available for most homeowners now.

8. Refinance with a hard money loan

You won’t like the high interest rates and fees of a hard money loan — one from a private lender, often an individual — but it might buy you some time to sell your home and prevent foreclosure. This shouldn’t be your first option, though, if you can help it.