Everyone has money problems, but others have it tougher. There are times when a family has to move out of the house at once because of foreclosure issues. If you already own your home and you have saved enough money to cover your expenses during these difficult times, good for you. There are others though, who did not think something like this could happen to anyone. Some are caught off-guard and before they could plan ahead, the worst is already here. Things get worse when the unemployment rate increased ten-fold in just a couple of months.

Before it happens, or to stop something like a foreclosure notice from arriving in your doorstep, there are things you must know about the foreclosure process. Knowing all about what happens can be the first step to prevention. Those who are uninformed throughout the process of foreclosure are usually the ones who might make the same mistakes again.

It is not true that a foreclosure is beyond a person’s control, but everyone has his or her limits. If you missed a payment, your foreclosure process will start but the formal process will commence only after you refuse to settle the mortgage or talk to the bank during the grace period.

The first step to preventing a foreclosure is to review the terms and agreements of your bank loan. You have a copy of this in your possession and the bank also has one copy. Look for the foreclosure terms to understand what you must avoid doing so that you won’t be under threat of foreclosure.

The formal foreclosure process starts when you go for three months without paying your monthly mortgage. If you miss the payment this month but you pay both months after a few weeks, the process will not start. If you go for two months consecutively without paying, you will most probably receive a warning notice from your bank.

Those who are three months behind in payments will get the foreclosure notice, so you have to do all you can to prevent this from happening if you want to keep your home. If there is no way for you to keep your home, the best you can do is to use that time to rally your forces and find a temporary place to stay while the bank takes your home away. The worst thing that could happen is being thrown out with nowhere to go. Find a good place to stay while you fix everything when you are about to lose your home.

There is something called a judicial foreclosure or non-judicial foreclosure. In the former, a lawsuit is filed and you can choose to respond or not. In case you don’t respond, the home is auctioned off to pay for your balance. The bid will almost always be higher than what you owe the bank.

Under a non-judicial foreclosure, the lending institution gives you a statement of default. This statement is to notify you of the impending sale of your home. In this case, the bank gives you enough time to sell your home. If you come up with an acceptable arrangement that will cover the debt, you can save your home. You can also try to file for bankruptcy in order to stop the foreclosure. If nothing is done by the homeowner, the home will be sold.

Here is where it becomes more difficult. If the price by which the home is sold is less than what you owe the bank, you must still pay the balance. If you can’t pay, your credit rating will drop and it gets even harder to borrow from any financial institution in the near future.