Be warned that the longer you wait, the more difficult you make it for the lender to help you. If you are three months behind in your mortgage payments and the lender has not heard from you, the company will feel justified in pursuing foreclosure. It is vitally important to take action right away to save your home from foreclosure and protect your credit record.

Before You Contact The Lender

In this case it pays to swallow your pride and be prepared to discuss your problem openly and in detail. The more information the lender has the better able they will be to help you. If you really wish to make a good impression and get things off on the right foot think about some questions you may be asked and answers ready. The lender will see you are prepared and sincere.

Ways The Lender Can Help

Depending on your unique situation there are many different ways in which your lender might be able to help you.

Debt Counseling – If you have let your mortgage payment fall behind it stands to reason your other debts are in arrears too. Your lender can look at all your debt, see if it can be restructured, and help you make a spending plan and structure a repayment plan.

Payment Forbearance – If you have some equity in your home, it may be possible to rework your loan to lower the monthly payments for an extended period of time. The past-due amount could be added into the new loan.

Grace Period – By taking prompt action the lender will, in most cases, give you extra time to get your problem under control. However, if you fail to communicate with the lender, and you fall behind on your mortgage payments, they have no choice but to pursue foreclosure.

Sell The Home – If you don’t want to keep the home, or if the problem is so serious that it can not be resolved, it may be necessary for you to sell the home. Your goal is to sell the home and pay off both the mortgage balance and your delinquent debt, and thus avoid foreclosure. Be advised that a poor real estate market will limit this option.

Deed in Lieu of Foreclosure (Sign The Home Over To The Lender) – This is where you are unable to pay for the house and you voluntarily give the house back to the lender. Be warned that you still have to pay back any difference between what you owe and what the house resold for. Not every lender will always accept this arrangement.

Bankruptcy – This should only be used as a last resort because of the negative impact on your credit (up to ten years in some states). Keep in mind also that filing for bankruptcy is much more difficult these days due to new laws recently passed.

Questions The Lender May Ask

1. What caused you to fall behind your payments in the first place?
   Bad things happen to good people. Be open about the situation that led to your problem, such as losing a job, a medical expense, increased homeowners insurance, higher property taxes, etc. Stick to the facts and don’t embellish.

2. What is your current monthly income stream?
   Include monthly income, disability, retirement, or welfare benefits; and savings and investments.

3. What other debt obligations and expenses do you have?
   List only essential expenses and other current financial obligations. Stick to the necessities and forget the things you’d like to have. Be realistic. Include expenses such as food, utilities, loan or credit payments, insurance, child support, any other payment you are required to make.

4. What plans are you making to fix this problem?
   Brainstorm how you can manage your problem now, and also over the long haul. Tell your lender right away about your problem even if you feel the situation is hopeless. There may be ways to obtain financial assistance. If not, you may still be able to reduce your losses and prevent foreclosure. Foreclosure can ruin your credit record for years, so it behooves you explore every avenue and possibility.

Both parties, you and the lender, desire to see a successful outcome in stopping foreclosure. The lender wants their money and you want to salvage your credit. Working together you and your lender may be able to come up with a workable plan that benefits both parties, but remember that nothing happens until you take action.

To protect and educate yourself have your mortgage broker explain to you what each cost means, and why you are paying it. If you can, and I strongly recommend it, hire a real estate attorney to guide you through the whole process. They will protect you from making any costly mistakes. Surprises at the last minute are what you are trying to avoid. 

All too often consumers receive a call from the title company on the day of the closing. They are letting you know your closing costs are going to be a bit higher than originally expected. Their explanation is there was a mistake made in calculating some of the fees, and you need to bring more money to the closing. This is a common ploy used by title and mortgage companies to take advantage of your emotional state at the time. They know especially if you are refinancing to stop foreclosure that you are in a highly charged emotional state and simply want the whole thing to be over. They are calculating that by informing you at the “11^th hour” of the increased costs you’ll simply bite the bullet and agree to the new cost. 

As hard as it may seem at the time it is in your best interest to delay the closing. The mortgage or loan company will likely try to coerce you into continuing; perhaps saying you are legally bound to close on a certain date. This is not true, especially if the terms of the contract have been altered without your consent. Inform them you are going to postpone while you further investigate the reason for the increased fees. If you have hired a real estate attorney inform them of the change immediately.  If you wish to avoid a situation like this, it’s a good idea to understand what the costs and fees are, how they are calculated, and why they have to be paid. Below are some common closing costs and fees with a rough estimate of average cost: Property Appraisal – Confirms the fair market value of the home. Typically costs up to $500Personal Credit Report– For obtaining your credit history and score. Typically costs from $20 -$30 Closing Fee – This is paid to an independent party, usually the title company or an attorney, to conduct the closing. Depending on your state of residence it may be required that a real estate attorney be present at the closing. Typically costs $400 – $500Title Search – This fee is paid to the title company for doing a thorough search of the property’s records. The title company researches the deed to your new home, ensuring that no one else has a claim to the property.  Title search costs vary per Title Company.Survey Fee – Verifies all property lines. Typically costs up to $400
 Flood Zone Determination – This is paid to a third party to determine if the property is located in a flood zone. If so the insurance is purchased separately by the buyer. This fee widely varies depending where you live. You may pay as little as $20, or up to several hundred depending.Courier Fee – This covers the cost of transporting documents to complete the loan transaction as quickly as possible. Typically costs between $20 – $40Lender’s Policy Title Insurance – Assures the lender that you own the home and the lender’s mortgage is a valid lien. Typically cost between $500 – $1000Owner’s Policy Title Insurance – Protecting you in the event someone challenges your ownership of the home. Typically cost between $500 – $1000 Homeowners’ Insurance – This covers possible damages to your home. Typically costs start around $400 and go up.Buyer’s Attorney Fee – Not always required. Different costs are associated with this fee from state to state. Typically costs $400 and up.Lender’s Attorney Fee – Not always required. Different costs are associated with this fee from state to state. Typically costs $150 and upEscrow Deposit for Property Taxes & Mortgage Insurance – Often you are asked to put down several months of property tax and mortgage insurance payments at closing. The amount varies according to the value of the home.Transfer Taxes – This is the tax paid when the title passes from seller to buyer. This fee varies widely depending on the state or municipality.Recording Fees – A fee charged by your local recording office, usually city or county, for the recording of public land records. This fee varies widely depending on the municipalityProcessing Fee – This goes to your lender. It reimburses the lender for the cost to process the information on your loan application. Typically costs up to $1,000 Underwriting Fee – A fee paid to lender to do research to determine whether or not to approve the loan. Typically costs up to $800.Loan Discount Points – These are prepaid interest. One point is one percent of your loan amount. This is a lump sum payment that lowers your monthly payment for the life of your loan. Amounts vary according to the number of points you pay.

Pre-Paid Interest – This is money you pay at closing in order to get the interest paid up through the first of the month. These costs vary depending on loan amount, interest rate and time of month you close on your loan.

It is your responsibility to verify that these fees are exactly what you agreed to pay. Questioning your closing costs will take some time and effort, but the opportunity to save several hundred if not thousands of dollars at closing time makes it worthwhile. The small fees individually seem insignificant, but when added together they can make a substantial difference. Every dollar you manage to save at the closing will be money well earned.

Closing costs are unavoidable for at least one of the parties involved, but there are ways to reduce this expense. Education of the home buying process is necessary and consumers should educate themselves on the closing process and all of the fees involved. They should also learn about potential scams that less scrupulous companies may employ so they can protect themselves. To avoid being victimized, along with obtaining the best deal on closing costs, borrowers should carefully consider the following advice.

Do your homework. Educate yourself on the multitude of options available that reduce closing costs. Learn which are beneficial and which ones just transfer the costs to the loan, which can end up costing more in the long run. With the amount of information available today there is no excuse for being unprepared. Visit your local library, bookstores, search the Internet and read free information from experts in the field. There are forums on the Internet where others like yourself who have been through this left their comments on the experience. This type of information is priceless, and best of all it isn’t slanted to selling you anything. The information is out there and consumers should read and digest everything they can. It is also a good idea to do some research on real estate scams and real world examples of mistakes that others have made.

A recent phenomenon gaining popularity is no closing cost loans. They seem like a great idea, but the problem with these types of offers is that in reality the closing costs are simply added to the mortgage and the borrower ends up paying more interest on the loan. In the end the closing costs could end up costing significantly more than if they were paid up front. If there is no money available to pay closing costs up front this option may be beneficial but if it can be avoided do so by all means.

If the real estate market in your area is favorable for it then consider negotiating with the seller to pay all or some of the closing cost themselves. If homes are selling quickly and at market price it may be more difficult to convince the seller to contribute to closing costs as there is a good chance that the house will sell otherwise.  If you find that local real estate promotes a buyers market then you have much more leverage, especially if the seller is having a difficult time selling the house. They may be more willing to negotiate an agreement to help with or pay for all of the closing costs. If you happen to be refinancing this option is unavailable.  

One of the largest components in closing costs is title insurance. Many consumers are unaware of what title insurance and do not know that they need it. That is until they see it as one of the costs on the closing documents. Because of this lack of knowledge most consumers have no idea of their right to shop around for title insurance. They simply allow their mortgage broker or real estate agent to take care of this, which can be a big mistake. By shopping around for title insurance consumers can cut $100’s or even $1000’s from their closing costs.  

There are other fees, such as courier fees, notary fees, documentation fee, overnight delivery fee, points, processing fee, and others which may be duplicates of other fees, or which are fees which the originator has marked up to add to it’s profit margin. These are the fees, sometimes called hidden fees, which you may overlook or not feel you have the right to question. You do have that right.  There are other options available that can cut closing costs whether you are refinancing or buying a home.

A little research can go a long way and if consumers take the time they should be able to find something that suits their needs. We all want to save money, conserve any home equity, and all it takes is a little time to gain some knowledge and make the appropriate decisions.

It seems everybody from plumbers to chefs to home-makers is quitting their jobs to become loan officers. It’s fairly easy, too easy in fact, to get licensed as a loan officer. That along with the lure of making more money off one deal than they might make in a month is too tempting. Just like rookies in sports these individuals makes mistakes, often costly, until they learn the play book. Your task is to avoid being a practice tackling dummy. 

All too often consumers trying to refinance to stop home foreclosure find out far too late they have hired a rookie loan officer hell-bent on getting the loan underwritten. After all, that’s when they get paid, so it’s in their best interest to keep you on the hook all the way through to the bitter end.  Choosing the right loan officer can positively impact your wealth in the long run. Here are some tips for choosing the right one. 

Do your homework 

You are making a decision that will have far-reaching impact on your finances. Do not allow being under pressure to avoid foreclosure overshadow sound judgment. 

 Get a loan monitor 

These are people who have experienced what you will go through, and are willing to look at your paperwork, and show you theirs. They must be near enough to you so you can show them the paperwork and ask questions. I don’t suggest using a family member as they might try to protect you instead of being up front. A trusted friend who has been through the mortgage loan process would be my first choice. Probably the best reason to get a loan monitor is they are not under the same pressure you are and will be more objective and level-headed.   Proceed with caution Understand that the loan industry is basically a big machine, just like the pharmaceutical industry, the automotive industry or the medical industry. Many loan salespeople are the products of a “throw it all against the wall and see what sticks” training program. Few own their own homes, yet they make decisions for you. Seems ludicrous, but unfortunately it’s true. The industry makes billions of dollars, and it is insatiable, always wanting more. So comparison shopping is a must. 

Check them out 

Go to ConsumerAffairs.com’s section on mortgages or your state government web site, or your loan monitor, and check the background of these companies. Visit Google and do a search using the loan officer’s name. Do the loan company too, you will be amazed what you will find out. If you discover the loan officer isn’t what they portray to be then keep looking.  Have courageBe ready for the emotional highs and lows. It’s important not to give up. Don’t become frozen like a deer in the headlights. It is combination of information explosion and aimless direction that may kill your will. You can protect yourself, but you have to work at it — do your homework, get good help, pay attention and don’t lose your nerve.