It is in the news everywhere about foreclosures on homes. Real estate scam artists prey on people facing foreclosures of their homes because they know such people are in a very vulnerable state of mind. For most people, their home is their single biggest investment and foreclosure of this important asset can cause devastation both in their financial standing as well as their emotional balance and well being. The key then becomes avoiding foreclosure at all costs. Sadly though, by the time one tries to attack the problem of facing foreclosure, it is too late and precious time has been lost. In this article, the author tries to go back to the basics of how to avoid foreclosure of your home.

First things first. In this article, we will explore the time tested way to avoid foreclosure BEFORE it happens. The difference between success and failure as is well known is in proper planning. Many people buy their homes based on an emotion rather than on solid economic fundamentals. Their claim to fame is that their lender said that the loan is approved. Well, that may be true but the true test of whether they are heading towards the destructive path of foreclosure or not has to be set forth by their own selves and evaluations. For avoiding foreclosure possibilities has to be considered at the time of buying and in fact, even a couple of steps before you even start looking to buy your home. The key then to avoiding foreclosure is to be able to afford what you are planning to buy. Just having sufficient down payment is not enough. You need to have sufficient down payment and then have the financial stamina to keep making those dreaded monthly mortgage payments every time on time. Additionally, funds to pay for the real estate taxes and insurance have to be available on time every time. This is in addition to any repairs or maintenance costs that you foresee. The amount of money that you have left in the bank and your income level must be such as to cover all these costs. Hence when you consider a lender that might potentially say that you need to put down twenty percent of the home value as down payment and that your debt service ratio shall not exceed twenty eight percent and that your total debt service ratio for all debt shall not exceed thirty six percent or whatever the numbers they give you, keep in mind that there are hidden expenses not included in this calculation such as maintenance costs. Additionally, you need to ensure the strength of your income source. If your job is not secure or there is potentially a strong chance that your employer may relocate the company or any such disruption in income is foreseen, then even though you may be able to afford to buy your home based upon current conditions, you may not be able to pay the payments very soon down the line and you are vulnerable to foreclosure. If you are expecting major surgery or hospitalization soon, then your income level might get affected and foreclosure could take place. Make sure you have sufficient life insurance, because if you are the sole breadwinner of the family and you pass away prior to paying the mortgage off and if real estate values go down really fast, then your family may be left behind with potentials of foreclosure. Hence these are factors to be considered BEFORE you buy the home and not afterward. The steps to be taken to avoid foreclosure thus have to be taken prior to signing the contract to purchase your home and all of the factors that can be accounted for have to be properly analyzed.

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