While improving financial conditions have reduced foreclosure rates from the appalling levels they reached back around 2010, they do still happen. 2021 saw foreclosures on a little over 151,000 properties across the nation.

If you’ve never faced Denver foreclosures, you might feel a little hazy about what they mean for property owners. The answer is unfortunately simple. In essence, a foreclosure is a repossession of the property by the lender.

The lender then auctions off the property in a bid to pay the balance due on your debt. If that sounds like something you’d rather skip with your Denver home, keep reading for seven ways you can avoid foreclosure.

1. Read Everything

As a home owner, your very first step in avoiding foreclosure is understanding your own situation. If owning a home is part of your dream life, you’ll need information to preserve that dream.

Look at all of your loan documents. These documents will detail exactly what your lender can do and under what conditions.

Yes, those documents are also full of legalese. Yes, they are often designed to make it hard for you to understand them. Don’t let that fact dissuade you from digging into the documents.

You may not like everything you find, but it will help you know exactly where you stand.

2. Don’t Ignore the Problem

Financial problems of any kind are a constant source of frustration and stress. When the problem centers on your home, it can magnify that stress and frustration.

As tempting as the impulse may feel, don’t ignore the problem. If you ignore the problem, you will only make it more difficult to avoid a negative outcome like foreclosure.

Minimally, make sure you open and read any communication from your lender. If nothing else, it keeps you in the loop about what the lender plans to do.

For example, your lender will always inform you before they take legal action to give you a chance to work out something before they do that.

3. Modify the Your Loan

While it might not look like it from your side of things, your lender does not want your property. Foreclosure and auctioning off the property is a last-ditch effort to minimize their losses. In other words, lenders much prefer a customer making payments to an ugly legal process.

Talk with your lender about the possibility of modifying the loan terms. For example, they might adjust the payment size or your interest rate to make it easier for you to get back on track.

Additionally, they may extend you a forbearance. In essence, they put a pause on your payments while you get your finances back into order. The exact terms of a forbearance will depend on your lender.

In some cases, they may simply add the missed payments to the end of your loan term. If you owe back payments, however, they will generally insist that you bring the account up-to-date when the forbearance ends.

4. Refinance

Refinancing is a different path you can explore. Refinancing may let you secure better loan terms than the ones you got with your original mortgage. You may get a better interest rate.

You may also get a lower monthly payment this way. Although, that generally comes at the cost of extending the amount of time you’ll spend repaying the loan.

In the case of facing foreclosure versus refinancing, though, that longer period of time repaying your loan is often the lesser of the two evils.

5. Use Your Assets

While it’s not true for every household, many households have assets that they either don’t use or don’t use often. For example, do you have an extra vehicle that only gets occasional use?

Sure, the loss of that vehicle will prove inconvenient. Selling it can also get you a tidy sum you can use to get back on track with your mortgage payments.

Do you have antiques? Antiques can often fetch a fair bit of money if you can place them with the right buyer. The same goes for collections, such as comic books.

The loss of family heirlooms or a collection that you spent years acquiring can hurt, but it always beats losing your home.

6. Borrow or Bring in More Money

It’s almost never anyone’s first choice, but borrowing money from a family member or very close friend can keep the specter of foreclosure away. Before you go down that road, you should have a clear plan for how you will repay that money in a timely fashion.

Explain the situation and your plan to repay the money.

You can also look for ways to bring in more money. You can negotiate for a raise at your current job.

A second job in the evening for even minimum wage can bring in several hundred extra dollars per month. While it’s not a long-term solution, it can help ease the immediate crisis.

7. Sell the Home

A final option to avoid foreclosure on your Denver home is to sell the home. You can take your chances and simply list the home with a real estate agent. The home may or may not sell fast enough.

You can also look at a Denver short sale. This kind of home sale happens fast, although it’s usually for less than the actual value of the home.

The money goes directly to the lender. It’s on the lender to decide if they want to pursue you for any leftover balance on the loan. Many lenders decide it’s not worth the time, effort, and cost involved.

Avoiding Denver Foreclosures

You have many potential options for avoiding Denver foreclosures. You can negotiate with your lender for better terms or a forbearance. Refinancing your home is also an option.

You can sell off assets to get back on track. Bringing in more money through a raise or second job can take the pressure off. If all else fails, you can sell the home on the open market or through a short sale.

Denver Short Sales specialize in helping owners get out from under loans they can’t afford. If you’re struggling with your mortgage payments, contact Denver Short Sales today.