When a prospective foreclosure looms, the dispirited homeowner may feel that there is no way to salvage the property. Some lenders, however, are willing to help; others are less understanding and will demand that you pay up or get out.

So as a homeowner facing this threat, you need to know your options to optimize your choices.

Repayment Plan

If a borrower can develop a realistic repayment plan, normally lenders will be willing to negotiate the current mortgage. Seldom, after all, does a lender actually want the responsibility and financial loss associated with reacquiring the property. Consequently, a lender may spread the overdue amount across several months, allowing the borrower a chance to catch up.

The borrower, however, may need to prove he actually has the financial capability to achieve the repayment. The lender may require an initial payment or some type of collateral besides the house itself. It is a simple plan and most lenders are willing to go this route.

Alter the Terms

Lenders have the option and (sometimes) flexibility to change the terms of the loan. They can reduce the interest rate or extend the term of the loan for additional years. Either will lower the monthly payment. If the lender is being uncooperative, a foreclosure negotiator may be able to help.

Quick-fix Loans

Another way to put the skids on a foreclosure is to get the loan updated. A borrower can try to refinance the property to obtain a better interest rate and therefore monthly payment. This option, though, may not be possible or even desirable since there is already an outstanding loan.

The borrower could conceivably ask a friend or family member for a loan. This approach would bring the loan current and satisfy the borrower. But borrowing from family or friends is fraught with its own set of relational risks!

Sell, Sell, Sell

In most cases the owner has the option to sell the property. Owners may have to take a substantial price cut to do so, especially in a tough housing market.

In choosing this path, the borrower has at least some control over the process. Though the lender must be paid first to settle the debt, any profit realized through the sale would belong to the original homeowner.

Another angle on this approach is the prospect of selling the house to a friendly party. Friends or family members could buy the property and clear the deed. The original owner can later buy the property back. Again, high relationship risk!

Foreclosure does not have to be the end. If a borrower is pro-active and develops a plan of action before the visible crisis, he can quite often rectify the situation. It may take some imagination (and groveling) but it can be done.