Pre-foreclosure and You: Making Lemonade out of Lemons

Even when you know you're going to come out of the other end OK, being in pre-foreclosure and then moving on to foreclosure can be tough. You're walking away from the money you've already put into your house, after all, as well as walking away from an investment that's gone bad.



Kristin and I have been through this, and we believe that information is the best antidote to troubling times. (Well, information and a sense of humor!) Information is power. If you're looking at foreclosing on your house, you're going to want all the power you can get.



So what is pre-foreclosure? This is the precious period of time between when you decide to stop paying your mortgage and when you get the first notice that your lender is going to proceed against you to take your house back.



This is a powerful time—a time when you begin having options you didn't have before. But you've got to plan carefully for your future when you're in pre-foreclosure so you can be ready for the foreclosure itself—and more importantly for life after your foreclosure!



First, make sure that all of your other payments are up to date, and keep them there. You're not making a mortgage payment anymore—use that money to help pay your other bills! Keeping the rest of your bills current will protect you from taking such a large hit to your credit rating after your foreclosure.



Do you need to make any major purchases? A new car? Do it now, preferably before the second payment on your current mortgage comes due. This step alone will save you thousands of dollars in wasted interest payments!



If you have any accounts at all other than your mortgage with your mortgage lender, move that money out of those accounts before you skip your second payment! You don't want your lender trying to take money out of your other accounts! Also, one way you're going to discourage your lender from going after you after your foreclosure is to show hardship. If possible, take the assets you have and put them in an account held by a very trusted friend or relative.



Now, you still have options once the foreclosure proceedings begin. You can apply for a loan modification, for example. Very, very few people get them, and for the most part they don't help—but the application can drive back the foreclosure process by 6 months or more. That's 6 more months you get to live in your house rent-free!



The other thing to remember about pre-foreclosure and foreclosure is how important it is to stay calm! Your lender will try to harass you—stop answering the phone. Or better yet, scrap that expensive land line completely and get yourself a pre-paid phone with an unlisted number!



Your friends and extended family may be under the delusion that you should do the "honorable" thing and keep servicing that underwater mortgage. Calmly tell them that you think it's more honorable to protect your family during this foreclosure, and don't let them sway you.



Unless they're willing to take on your mortgage, that is!



As you're contemplating pre-foreclosure and foreclosure, remember that this is not a life-and-death situation unless you make it one. There is life after foreclosure, and you'll make it a good one if you just keep your head together, learn everything you can, and plan carefully!

Bud and Kristin Gragg have over thirty years of Real Estate sales, investing, and development experience combined, they have just survived liquidating over 24 million in underwater investment Real Estate and their incredible story needs to be heard by millions right now. Go To: The Underwater Mortgage - How to Survive Your Sinking Ship While Keeping Your Sense of Humor,where you can get a FREE Special Report "Underwater Mortgage Secrets: What the Banks Don't Want You to Know" Just for stopping by!! If you or anyone you know is Underwater in their home or any of their investment properties - the information on www.TheUnderwaterMortgage.com is an absolute must!

Bud and Kristin Gragg

The Underwater Mortgage

101 N Colorado St Suite 2710

Chandler AZ 85225

480-497-5600