When you experience a mortgage default it may feel like the whole world is crumbling around you. Although it may seem like you have no options, there is usually time to turn things around. There are no easy answers, but if you can avoid a foreclosure, you will be much better off in the long run. If you ever wanted to buy another house again, avoiding foreclosure is in your best interest. Consider these options before you give up.

Negotiate With Your Lender

There is a time period after you go into default that your lender will most likely be willing to negotiate with you. They do not want to foreclose on your house, if they can avoid it. They are not in the real estate business and when they foreclose on a property, they will not make any money on the deal.

First try to negotiate a realistic repayment program. They might lower your interest rate or erase the past due payments for you. If you can start with a clean slate, you will be much more likely to repay the debt. They want to work with you and many times, foreclosure can be avoided during this process. It may be to your advantage to hire a lawyer that specializes in this sort of negotiation. Sometimes they can get you exactly mortgage repayment plan that you need.

Hard Money

If you are in default, you probably believe that not many people would lend you money. However, with hard money loans, you may be able to find the money you need. A hard money loan comes from a private lender that is searching for a higher than average return on their investment.

Hard money lenders do not work under the normal constraints of a traditional mortgage lender. They do not look at debt-to-income ratios and have hard, fast rules for lending. They will look at each deal individually to determine whether they will invest. Much of their decision will come down to how attractive the property is. They know that there is a chance that they will have to foreclose on your property. Therefore, they want to make sure that they can get their investment back. If they don't think they could sell it again, they will most likely not invest. Investing in homes that are in default is common business practice for hard money lenders. You just have to find one that will invest in your area.

Be prepared to pay much higher than normal interest. It will often be as much as 15% APR. The terms will also be less than favorable with a one or two year balloon payment due. However, you need to decide if it is better than losing the house. You can probably afford to pay 15% interest if it is the difference in losing your house or not.