When you miss mortgage payments, foreclosure may occur. This is the legal means that your mortgage company can use to repossess (take over) your home. Foreclosure could seriously affect your ability to qualify for credit in the future. So you should avoid foreclosure if at all possible.
The most common reasons for falling behind in a mortgage payment are loss of income, divorce, illness, and death in the family.
According to a recent Freddie Mac/Roper survey, 58% of 1,400 delinquent borrowers surveyed didn’t know that their lender could offer help to keep them in their homes. They thought there was nothing the lender could do for them.
As we will see, there are ways the lender can help. It is in the lender’s interest to NOT foreclose on your home. Foreclosure is an expensive process for the lender, and if they can work out something to keep you in your home without foreclosing, they would rather do that.
Do not ignore the letters from your mortgage company. If you are having problems making your payments, contact your mortgage company immediately. Explain your situation. Be prepared to provide then with financial information, such as a budget. Without this information, they may not be able to help. Stay in your home for now. You may not qualify for assistance if you abandon your property.
Some of your options include the following:
- Your mortgage company may be able to arrange a repayment plan based on your financial situation.
- They may provide for a temporary reduction or suspension of your payments.
- You may be able to refinance the debt and/or extend the term of your mortgage loan.
- Your mortgage company may be able to work with you to obtain an interest free loan from HUD to bring your mortgage current.
- You may want to try to sell your home and pay off your mortgage loan to avoid foreclosure and damage to your credit rating.
- As a last resort, you may be able to voluntarily “give back” your property to the mortgage company
A housing counseling agency can help you determine which, if any, of these options may meet your needs. You should always discuss the situation with your mortgage company.
Beware of scams! Solutions that sound too simple or too good to be true usually are. Unfortunately, there are people who may try to take advantage of your financial difficulty.
Some cautions:
- Don’t sign any papers you don’t fully understand
- Make sure you get all promises in writing
- Beware of any loan assumption where you are not formally released from liability for your mortgage debt and contracts of sale.
- Check with a lawyer or your mortgage company before entering into any deal involving your home.
- If you’re selling the house yourself to avoid foreclosure, check to see if there are any complaints against the prospective buyer.
A final word of advice, don’t ignore your situation, it won’t go away by itself. You must be proactive and seek help, either through your lender or a housing counseling agency.
The author has a website on personal finance.
Ken Hall
Filed under: personal finance | Tagged: budget, foreclosure, personal finance
[...] James | PinoyMoneyTalk.com wrote an interesting post today onHere’s a quick excerptWhen you miss mortgage payments, foreclosure may occur. This is the legal means that your mortgage company can use to repossess (take over) your home. Foreclosure could seriously affect your ability to qualify for credit in the future. So you should avoid foreclosure if at all possible. The most common reasons for falling behind in a mortgage payment are loss of income, divorce, illness, and death in the family. According to a recent Freddie Mac/Roper survey, 58% of 1,400 delinquent borrowers surveyed didn’t know that their lender could offer help to keep them in their homes. They thought there was nothing the lender could do for them. As we will see, there are ways the lender can help. It is in the lender’s interest to NOT foreclose on your home. Foreclosure is an expensive process for the lender, and if they can work out something […] [...]
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