Property foreclosure happens when homeowners fail to make a payment of their property mortgage on time. This is the legal remedy of lenders so that they can repossess and take over a home. As soon as this order is issued, you’ve got the responsibility to leave the home as soon as possible. While this is an unfortunate situation, it can happen.
And, when it does, you can be in for serious trouble.
Often, life and its other financial liabilities can get the best of you. Perhaps, there’s an emergency that you had to prioritize. Whatever the situation, when you fall behind your mortgage payments, the consequences will be knocking right at your door, too. Fortunately, there are many things you can do and habits you can practice, so you can avoid this from happening. It’s better to take a proactive approach, rather than cram later on as to what you should do.
1. Sell Your Home
If foreclosure is inevitable, then, might as well just sell your home. You can attempt a short sale on your home so that, at least, you’ll have money for yourself after covering the debts incurred due to delayed mortgage payments. This will be so much better than foreclosure from which you don’t receive anything at all in return, plus your credit rating is also destroyed.
Make sure you do thorough research before selling your home so that you’ll have enough funds to cover the mortgage debt. Otherwise, you might’ve already lost your home, and you still won’t have enough to pay for your debts.
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2. Don’t Ignore It
While this may seem like obvious advice, the truth is that it’s very easy to ignore a foreclosure order, whether deliberately or not. When you already have so many stressors in your mind every day, it might seem like this is one way to relieve yourself of it. But, the truth is that you’re only giving yourself temporary relief. You’re not solving the problem in any way.
Remember that the further behind you are with the payments, the harder it is to reinstate them. So, rather than ignore it, make little payments. Even if you may not be able to pay the full amount, this would, still, be a good way to minimize the debt little by little and show that you actually have the intention of paying your debts.
3. Gather Your Documents Right Away And Set Up A File
If you’re already behind on your payments, it’s a good idea to start getting organized. Take time to sit down and gather all of the records related to your home and put them in a single file. This should include multiple copies of the following:
- Mortgage or deed of trust
- Promissory note
- Copies of any letters you’ve sent to the servicer
- Monthly billing statements
- Insurance and property tax information
You may read this article to learn more about what a proof of deposit for a mortgage is, and how important it is in case of a foreclosure.
Gathering the said the documents the soonest possible time can make it easier for you to have them all ready when the bank or courts ask for them That way, you wouldn’t have to spend so much time finding each one of them. The period you’d lose just doing that can only worsen the foreclosure even more.
4. Try To Apply For Loan Modification
If there’s still room or opportunity for it, it also helps to apply for loan modification. This is especially helpful if you can’t pay your mortgage this month or in the next.
Modifying the terms of your loan may enable you to reduce monthly payments or the interest rate. The bank can do this for you, but usually depending on your current circumstances.
If you ask your lender about any other loan extinguishment program to help you pay off your debts faster, there may even be a relief available, particularly if the mortgage you owe is already beyond the amount of your home’s worth.
5. Contact Your Lender ASAP
As soon as you experience any financial difficulty, contact your lender about this. Don’t just let the problem sit on the table as the interest rates accumulate.
When the problem is still early, lenders are also open to giving debtors other options as they also want to avoid complications as much as you do. The sooner you inform your lender about your financial constraints, the more opportunity you have to explore these options before it’s too late.
6. Learn About Your Legal Rights
Even when your property is about to get foreclosed, this doesn’t mean that you’re already devoid of legal rights. After you’ve completed gathering all of your documents, take time to read them so that you’re reminded of the consequences you’re bound to face if you don’t make the payments on time.
Typically, the most important documents that can help you decipher your legal rights and obligations are the promissory note and deed of trust. These hold information like:
- What other fees can the service provider charge now that you’re behind your payments
- Whether or not there’s still a possibility for you to reinstate the loan before it reaches the point of foreclosure
- What the new monthly payments will be under the loan reinstatement program
Depending on where you’re reading from, the lenders also are banned from starting foreclosure within a certain timeframe of delays. So, be sure you have knowledge on this for your own protection.
With all the stressors that life may bring, a foreclosure notice is surely not one of those you’d like to have. It’s hard to lose your home, particularly when you’ve got nowhere else to go. Moreover, it can be very hard to find another home when you’ve already got a foreclosure notice record. This can significantly hurt your credit rating. So, before this even happens, it’s important to take a proactive approach. Debts and financial difficulties may always be there, but there’s always a good way to manage these better.