Owning a home is one of the biggest investments anyone can make. However, as desirable as this is, owning a home comes with several responsibilities, one of which is mortgage payment. Mortgage payments made to the lender are dependent on several factors including the type of home, the worth of the home, how much was paid as a down payment towards the purchase of the property and others.
In some cases, homeowners may be unable to meet up with the agreed sum which has been entered with the mortgage lender and this may lead to some problems. Failure to meet up with mortgage payment may lead the lender to repossess the home. Home repossession has several implications, not only on the welfare of the property owner but also on their credit rating. However, if a person is unable to meet up with his or her mortgage payment on a home that is worth less than the amount owed, then this may result in what is known as a deficiency judgment against the borrower.
As a homeowner, you most likely do not want to deal with the stress associated with foreclosure and this means you need to gather as much information as possible to help you avoid one and speaking with a bankruptcy lawyer could help. Below are some of the ways you can protect yourself from impending foreclosure.
Consult with a Foreclosure Prevention Expert
Foreclosure prevention experts or counselors are those who have years of experience providing solutions to homeowners who have defaulted on their mortgage payment. A foreclosure prevention expert will take a look at your financial condition and consider other options before presenting you with possible solutions to the problem at hand.
It is most recommended that you speak to HUD-approved, non-profit and credit counseling agencies as this guarantee that you can get free advice on how to best deal with the situation. The foreclosure prevention expert, after analyzing the condition may request financial information from the borrower and liaise with the lender to ensure that a suitable agreement is reached. Some of the possible agreement include extended repayment term to allow for lower fees, suspension of payment for some months pending when the homeowner will find their financial footing and some others.
Consult With the Mortgage Lender
When facing foreclosure, there is a need to take proactive steps as this is not one of such problems that will go away on its own. A good way to approach foreclosure is to arrange a meeting with the mortgage lender. A mortgage lender may be able to arrange a fair and flexible solution to the problem. Some of the common solutions offered by mortgage lenders include mortgage refinancing, repayment plans, loan modification, reinstatement, and forbearance. Below you will get a better understanding of what each of these solutions means:
This is suggested to a borrower when he or she has enough equity in the home to pay off late fees, old mortgage, land attorney fees.
This is a structured repayment where the borrower is allowed to pay certain percentages of the defaulted mortgage fees each month with their mortgage payments.
This is where the mortgage lender agrees to change the original contract that has been agreed to by both parties. The modification is aimed at making the payments affordable.
This is an agreement entered into between borrowers and lenders allowing the borrower to pay up the defaulted amount within a specified time frame. In most cases, this plan is paired with forbearance.
This is an agreement that sees the temporary suspension of the borrower’s mortgage payment. The suspension is allowed for a limited time and the missed payments are repaid later. A forbearance is an option that is made available to borrowers who are expectant of financial aids like tax refunds, extra money and more.
Tips To Avoid Foreclosure
If you have failed to make your mortgage payment and wish to prevent foreclosure, below are some of the recommended tips to help you out.
Don’t Sit Back and Will the Problem Away
While some problems can be ignored in the expectation that they’ll go away, foreclosure is one of those problems. It is recommended that you take active steps to ensure that you seek a solution to the problem.
Arrange a Meeting With Your Mortgage Lender as Soon as Possible
It is recommended that you arrange a meeting with your mortgage lender before or immediately after you have missed a payment. Doing this will set a good example with the lender and also improve the chances of getting a favorable condition with the lender.
Be advised that lenders do not want your house but will be forced to repossess it if you are not interested in protecting it.
Maintain Constant Communication With Your Mortgage Lender
While the fear of foreclosure can make many react irrationally, it is important that you keep in constant communication with your mortgage lender. Be sure to respond to all emails that have been sent to you promptly. The first mail from the lender will offer you some important information about foreclosure and how to prevent it. The information may help you to make better decisions and prevent foreclosure both in the short and long run.
Stay Updated With Your Mortgage Rights
As part of your fight against foreclosure, now is the best time to become updated on your rights as a mortgage borrower. Be sure to locate your mortgage loan documents and read through to catch certain information that may be of use to you, especially to protect your home from foreclosure.
Stay Updated With Foreclosure Prevention Options
As a homeowner faced with the possibility of foreclosure, it is important that you should stay updated with all the possible foreclosure prevention options that may be valuable to your plight.
Arrange a Meeting With a HUD-Approved Housing and Foreclosure Prevention Counselor
Speaking with a HUD-approved foreclosure prevention counselor can expose you to some of the best ways to deal with the condition at hand. The best part of this is that the counseling service is offered at no cost. The counselor can also obtain your financial information and meet with the lender to arrange favorable terms.
Become Financially Conscious
When dealing with late mortgage payments and foreclosure issues, now is the best time to become budget-friendly. It is recommended that you prioritize your spending to cut down on the excesses.
Leverage on Assets
A great way to prevent foreclosures is to use your assets to get off the hook. Assets like life insurance, a second car, jewelry sets, and others can prove important in settling your debts and helping you to keep a roof over your head.
Stay Away FromForeclosure Prevention Companies
Many companies specialized in foreclosure prevention services often lead homeowners astray, leaving them in worse conditions than they were. It is recommended that you stay away from these companies while seeking help from your mortgage lender.
Stay Away From Foreclosure Recovery Scams
Foreclosure recovery scams are targeted at frustrated and desperate homeowners. It is recommended that you stay away from these schemes as they could contribute to the loss of your home.
Check out our most recent blog post about Should You Hire a Deby Settlement Company or Lawyer?