No scenario is worse than a homeowner having to face the prospect of foreclosure. However, more than 50% of the American population have to face up to this fact, as an effect of the financial crisis during the past few years. Here, we will enumerate the many options that you have if your home is set to be foreclosed, and how you can choose the best one from the lot.

What Every Homeowner Facing Foreclosure Needs to Know about

So what's a recession-affected, foreclosure-facing individual to do? The good news is that there are plenty of options that you can consider if you are a homeowner facing foreclosure. Remember that not all of these solutions are applicable to your particular situation. You need to consider your finances, your future plans and your current needs as a family when deciding which of the following routes to take.

First, you can go for a loan modification option. This is a viable financial option if the bank agrees to change the terms of your existing home loan - allowing you to get an 'extension period' to stay in your home. When opting for loan modification, make sure to seek the help of a financial expert who can negotiate with the bank so that you can get a deal that works most to your advantage.

Second, you can opt to have a forensic loan audit. Here, an expert will review your existing loan documents to determine if any violations were committed. Depending on the results, the auditor can use the information that they will get out of the assessment when negotiation with the bank on your behalf.

Third, you can choose to have a short payoff refinancing plan. This is usually handled by mortgage brokers who will determine if you are qualified for such an option. When deciding whether to go for a refinancing plan, make sure that the solution offered by the mortgage broker will resolve your financial problems in the long term - and not just provide a band-aid solution which is merely temporary.

Fourth, you take advantage of a short sale which occurs when you sell the house for a value which is less than what you currently owe. For this, you need to seek the approval of lien holders like the bank and contractors. You can use the 20% statistics revealed by the National Association of Realtors - which refer to the percentage of short sale homes listed which are actually sold. This is a pretty low number, so it's up to you to decide whether you should take your chances or not.

Your fifth and last options are to file for bankruptcy, or let your home go through the foreclosure process. Remember that a bankruptcy will stay on your credit record for more than seven years - which will greatly hamper your purchasing power as a consumer. Also, filing for bankruptcy does not necessarily eliminate the possibility of foreclosure - it can still happen if you fail to make payments. If you allow your home to be up for foreclosure, it will stay on your credit record for the same number of years.

All in all, being a responsible homeowner is all about laying out your cards on the table. Exhaust all the other options that you have first - and make sure that your last option would be to file for bankruptcy or give up your home for foreclosure. These will be a huge markdown on your credit record, so go for it if it is the only solution to the financial crunch that you're currently in. ezinearticles