Avoiding Mortgage Foreclosure
Since the housing boom bubble burst in 2006 millions of families in the US have been hit by mortgage foreclosures. Losing you home can be devastating, there are no two ways about it, but there are certain steps that you can take to avoid mortgage foreclosure as far as is possible.
Mortgage foreclosure is essentially the legal means that a lender has to repossess your home if you do not keep up repayments on your mortgage.
It’s all to easy for those still in the black to say that if you don’t want to lose your home you should simply make your mortgage repayments on time. However, in times of economic difficulty with astronomical unemployment and a sluggish housing market, is it any wonder that many of us are running into unexpected difficulty through no fault of our own?
Building up a savings buffer to see you through tough times is an important step in planning for a more secure financial future, and it’s a step that we should all take. Nevertheless, disaster does happen, so if you’re finding it tough to keep up your mortgage repayments, or if you find yourself without a penny left in the bank, what should you do? Here are a few steps that you can take to minimize the chance of losing your home if you are facing financial difficulty:
- If you miss a mortgage payment, for whatever reason, or if you lender contacts you to let you know that they are considering foreclosure, speak to them straight away. If you explain your situation at the earliest possible opportunity you may be able to resolve the problem without further problems.
- If you have suffered a loss off income or have met with an unexpected rise in living expenses, you may qualify for “special forbearance” whereby your mortgage lender may agree to temporarily reduce or even suspend your repayments.
- There are also a number of other options that may be available to you. You may be able to modify your mortgage by extending the term of your agreement, or you may be able to work with your insurer to receive a one off payment from the FHA insurance fund to get you back up to date on your payments.
- If you don’t qualify for any of the above options, you are unable to sell you home at market price, and are faced with the prospect of losing your home you may be entitled to make a pre-foreclosure sale, whereby you will be permitted to sell your home for less than the property is worth.
- As a final resort you may be able to voluntarily leave your home, handing the deed back to your lender. Although you will still lose you home you will avoid the financial blemish that accompanies foreclosure and could make life difficult in the future.
Complete honesty and openness will get you much further than ignoring those early warning signs. If you’re having trouble keeping up repayments on your mortgage it should be an absolute priority to speak to your lender as soon as possible. You may also want to consider seeking mortgage advice from a mortgage counselor.
For the majority of homeowners the home is central to everyday life, and as such often remains a treasured possession. If you fail to heed the early signs of pending mortgage foreclosure you could end up losing not just a financial asset but huge emotional investment too.
This post was written by John Hughes who is the resident blogger at Independent Financial Advisor.