By All Means, Avoid Foreclosure
Have you lost your job, have no income coming in, are 3 months behind on your mortgage payments, and wondering how to avoid foreclosure? If so, these tips may help.
Foreclosure is when your mortgage lender uses the courts to take over your house for non-payment of your mortgage. The bank takes possession of the house and puts it on the market to recoup its loan losses. If the home brings in less than the amount remaining on the mortgage, the bank will seek a deficiency judgement from the courts. If the court rules in their favor, which it usually will, you will be forced to pay the difference.
Putting Your Head in Sand Doesn’t Work
Don’t try to escape the problem by avoiding phone calls and letters from your lender. Make it a point to respond to each and every communication.
One of the primary ways of avoiding foreclosure on a property where you are late in making payments is to ask the lender for a mortgage modification. A mortgage modification extends the length of the loan to the point where you can more easily make the payments. For example, a mortgage of $150,000 for 30 years at 5% is $805. That same mortgage for 40 years at 5% is around $720, a difference of about $80 a month.
If you still have your job or a source of regular income, refinancing is another option that may be available to you. If you are behind in your payments, they will most likely require that you get your loan current before considering a refinance for you. This is especially a good option if interest rates have gone down since you first obtained your mortgage.
Because so many families are in trouble with their mortgages now, some banks have foreclosure bailout programs that will basically adjust the principal thus making your mortgage payments lower. To qualify, however, the rules are very stringent.
Some lenders have a policy called that allows them to re-age your account under certain conditions. Usually, to quality, you will have to have made a certain number of consecutive payments. They usually also limit the number of times a loan can be re-aged within a specified time period. Under re-aging, the bank will take the amount of money that you are delinquent and tack it on to the end of your loan. This brings your loan up to date. They will simultaneously extend the loan period so your payments won’t increase.
It’s important to remember that the longer you wait before talking to your lender, the fewer options there are that will be available to you. Therefore, it’s in your best interest to contact your lender as soon as possible when you encounter any difficulties repaying the loan.