Homeowners who fall behind on their mortgage payments may find themselves in the unfortunate position of facing foreclosure. Those who find themselves having trouble making payments in a timely manner are well served by proactively working with their lenders and educating themselves about foreclosure regulations in their state. In many cases, foreclosure can be avoided if consumers act wisely and reach out to their lenders for assistance before allowing their payment problems to progress too far.
Considerations
If a homeowner becomes unable to make mortgage payments in a timely manner, it's essential to reach out to the mortgage lender right away. By taking action before becoming seriously delinquent, a homeowner may be able to work out arrangements that can avoid facing foreclosure. In some cases, lenders can negotiate repayment terms, adjust interest rates, or refinance existing loans when help is requested before repayment problems become serious.
Time Frame
Foreclosure regulations vary from one state to another, so it's difficult to assign a specific time frame within which foreclosure is likely to occur. Once a mortgage loan becomes delinquent, lenders have the option of beginning foreclosure proceedings in a manner consistent with what is allowed by state law. In most situations, mortgage lenders will initiate foreclosure proceedings once mortgage payments become three or four months past due.
Misconceptions
Lenders are not anxiously awaiting opportunities to foreclose on homes. It's much better for lenders to keep borrowers in their homes, making payments on their loans than to deal with the legal expenses associated with initiating and following through with foreclosure proceedings.
Prevention/Solution
Homeowners who are faced with the possibility of foreclosure may benefit from reaching out to a housing counseling agency certified by the U.S. Department of Housing and Urban Development (HUD). These organizations offer free or affordable advice to people dealing with the reality of potentially losing their homes to foreclosure. A qualified housing counselor can educate homeowners about the available options for avoiding or remedying foreclosure and their potential consequences.
Warning
If a home goes into foreclosure and the property is sold at auction, the homeowner is not necessarily free from financial obligation associated with the mortgage loan. The homeowner will be responsible for paying the difference between the outstanding balance on the home loan and the purchase price of the property when sold at auction.
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