We turn the houses we buy into homes by filling them with personality and building memories within their walls. When homes are lost to foreclosure, it can be a devastating loss –and not just financially, but personally, too. What is foreclosure, and how can you avoid it? Crystal Clear Mortgage is hereto help.
A home enters foreclosure when a homeowner is unable to make home loan payments, whether on the interest, principal, or both. In foreclosure, the lender has the legal right to seize and sell the property as a way to recover the losses on the delinquent loan. In some cases, if the property is worth less than the outstanding balance of the loan, the borrower in default will also be responsible for reimbursing the lender the difference in what’s called a Deficiency Judgment.
As you can see, avoiding foreclosure is important –and entirely possible. Here’s how.
Buy within your budget.Too often, homebuyers neglect to consider all the costs of homeownership, which extend well beyond the mortgage payment. Factor in insurance, property taxes, maintenance costs, homeowner’s association dues, utilities, repairs, renovations and much more to truly understand how much home you can afford. Your lender can help you work through this process when you pre-qualify.
Be proactive.Whenever possible, prioritize your home loan payments to avoid foreclosure. If your financial picture has you worried about your ability to continue making payments, seek out credit counseling and contact your mortgage lender as soon as possible. Most lenders are willing to work with youto help you avoid foreclosure.
Be responsive.If you miss one or more payments and are contacted by your lender, respond to their messages quickly. Doing so will give you the best opportunity to negotiate payment terms with your lender.
Consider what you can do. If you fall behind on mortgage payments, there are several ways your lender may work with you. One is called reinstatement, which allows you to promise to bring your loan current by a particular date with a lump sum payment. With forbearance,
lenders allow you to delay payments temporarily until you can repay. For those who can resume payments, a repayment plan can help you catch up with past-due amounts over time. And if you are four to 12 months delinquent but can resume making payments, your lender may be able to help you file a partial claim from the FHA Insurance Fund to bring your mortgage current. If you can make current payments but can’t catch up on past-due payments, your lender may be willing to modify your home loan to help. This means your past-due amount is refinanced back into the outstanding balance of the loan. During this process, terms may be lengthened to help lower your payments as well.
Sell or give back your home. If your loan is two or more months delinquent, you may be ableto sell your home in a “pre-foreclosure sale” without having to go into foreclosure.
Get FHA and VA loan assistance. If you have one of these loans, contact the authorizing agency to discuss special assistance programs that may be available.
If you find yourself unable to make your home loan payments, help is available, so don’t wait to take action to save the house you’ve made into a home. If you have questions about foreclosure, just ask! We’re here to help.