How to Prevent You from Home Foreclosure and Losing Your Home?

Some ten million adjustable rate loans are slated to undergo a “rate reset” over the next three years, and millions of American homeowners are wondering how they are going to make the new monthly payments, projected to be as much as double their current monthly expense.

Recent proposed Bush Plan of rate-freeze to stop foreclosures only one forth of the home owners potentially will face foreclosure. To be qualified to the rate-freeze, you must meet the first round of requirements for the plan: subprime adjustable-rate mortgages (ARMs) with an initial fixed-rate period of 36 months or less, originated between Jan.1, 2005 and July 31, 2007, with interest rates that reset for the first time between Jan. 1, 2008 and July 31, 2010. The plan applies only to loans that have been packaged into securities and not those that are held by banks on their own books.

If you have a subprime adjustable-rate mortgages, and think you may not be qualified for the rate-freeze, you may need to consider taking proper actions to protect your home.

If you are in following situations, you might be in great danger in this foreclosure avalanche:

1. You put nothing down when you bought your home and there is no equity in your home.

2. You have an interest-only home mortgage loan.

3. You have home mortgage loan that results in negative amortization. That is you only pay minimum allowed.

4. You don’t have enough saving that could give you a cushion to cover you at least 5 to 6 of mortgage payments.

If you are in one or more than one of the situations, you are indeed in high chance to become a victim of this avalanche.

Then, how should you protect you from the home foreclosure avalanche and losing your home?

1. Take a look of your current financial situation and see if you are in one of the categories I mentioned above. If you are, then, take necessary actions accordingly as followings.

2. Lock your mortgage loan interest  into a fix-rate. Get a 30 years fix-rate loan. If you can, get a 40 years fix-rate loan, especially you feel your monthly payment is high in relation to your current income. This will decrease your monthly payment a little.

3. Refinance you adjustable rate mortgage into a fix-rate mortgage now.

4. Pay a little extra each month towards your principal if you can squeeze a $100 dollars, especially you have an interest-only mortgage.

5. Start saving some money as an emergency fund, ideally in a separate account just for the rainy days. The goal is to build an emergency fund enough for the mortgage payments of 6 months.

If you take actions right now, you will be in better position to protect yourself from the incoming home foreclosure avalanche.

To figure out if you have a subprime mortgage, you cannot look at following indicators.

It is likely you have a subprime mortgage if followings apply to you:

• When you applied for a mortgage your credit score was below 620.

• When you applied for a mortgage, you did not submit the full, required documentation of income and employment.

• You secured a mortgage from New Century, Ameriquest or one of these other top subprime lenders.

• When you secured financing, you did not make a down payment.

• If you refinance the loan or pay it off before its term expires, you will be charged a fee.

• You mail your mortgage payments to Countrywide, HSBC, or one of these other top subprime loan servicers.

• If you do have a subprime loan you may qualify for the Bush Administration's plan.

For detail information about subprime mortgage, click HERE.

For detail information on how to stop foreclosure and not loss your home, click HERE.

To list your home for a short sale for free to access qualified buyers and investors, click HERE.

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