Every now and then, bad things have a tendency to happen. For example, a blown engine or failed transmission could cost thousands to repair. An since having a car is necessary to get back and forth to work it is not a problem that can be brushed aside. Just one problem: Your mortgage is payment is currently 10 days overdue. What to do?

Circumstances like these can certainly be sufficient to overpower any home owner to the point that he or she does not stop to look into what foreclosure alternatives there may be. If you or someone you know is facing foreclosure then you should definitely read the following options below.

Repayment Plan

The first thing you should really do is contact your mortgage lender to see if an agreement can be reached to get you caught up on your mortgage payments. A mortgage loan repayment agreement will relieve you of the immediate threat of foreclosure. At the same time, it will create a short-term burden by raising your mortgage payments until the loan has been brough current. Until you get past the repayment plan you should assume that there will be little-to-no improvement in your credit score. After the financial storm has passed you'll find that your credit will significantly improve as time passes.

Loan Modification

You loan provider could be happy to change the terms of your mortgage loan via a loan modification. Many home owners got an adjustable rate with the hope that they'd be able to refinance it to a fixed rate. Then the housing bubble burst. Or maybe you could benefit by having your fixed rate lowered. This may also be possible. Many folks got a 15 or 20 year mortgage term, thinking they would pay off their loans is a shorter period of time compared to the standard 30-year term. But the payments associated with shorter terms are higher. You may be able to convert your term into a longer one. But if your lender does not see that your loan terms are causing you hardship then you may not qualify.

Forbearance

If all your other bills are making it hard to get caught up on your mortgage payment, then a forebearance can temporarily help your situation as you will not be required to make your mortgage payment. But a forebearance isn't all good peaches and cream, as your mortgage payment will go up after the grace period ends. If your loan is FHA-insured you may qualify for an FHA special forebearance. You may be able to go 12 months without a payment under this program.

Deed-in-Lieu of Foreclosure

While you'll be spared the pain and embarrassment of the foreclosure process with this option you'll still have to say goodbye to the property. If you are eligible, you will forefeit the deed. On the bright side, you may qualify for cash to help with moving expenses. Be advised that you may not qualify for a deed-in-lieu of foreclosure if it is determined that you are financially able to make your mortgage payments.

Cash Sale

With this option you sell your home to a third-party in time to pay your lender what is owed. If the deal can be finalized quickly enough you may be ın a position to avoid credit damage. This is a great option for anybody who isn't at the moment past-due yet foresees falling behind in the near future. You have got to be a real mover and shaker with this option and sell your home fast. Unfortunately, this may entail lowering your price below what the home is actually worth. Real estate investors may demand that you give them all equity in exchange for their paying off your mortgage balance.

Short Sale

In a short sale, the mortgagor (you) pays the mortgagee (your lender) less that what is actually owed on the property. This option generally stipulates a minimum sale price, which will be put in writing. While it is true that this option won't help your credit, it is also tru that your credit will be spared the damage that would otherwise be incurred if the property had been foreclosed upon.

Refinance

If you have enough equity then refinancing may be an option for you. However, when the loan is FHA-insurred even the home's equity doesn't matter. Under the FHA Streamline Refinance program only a borrower's recent mortgage payment history is taken into account. Because of this, a borrower's credit could be in the tank and it wouldn't matter. Nor would having insufficient equity.

In conclusion, hopefully you now know what foreclosure options there are. When foreclosure is starting to look like a very real possibility, doing nothing is the worst thing you can do.