Some of the Reasons For Home Foreclosure
Home foreclosure usually happens when the borrower defaults on their real estate mortgage payments. This is when the steps of foreclosure begin. The lender, commonly a bank, will file a Notice of Default and will try to retrieve the character from you. In many situations however, you are usually given a one year grace period to update your loan and reinstate ownership of the character. During the grace period, you, being the borrower and the homeowner, also have the option to sell the character to a third party and pay off the complete loan. This will prevent a foreclosure record on his credit history.
Understandably, we all want to avoid foreclosures for the fear of being evicted from our homes. In order to avoid this distressing situation, it is important to know the reasons why homes get foreclosed.
This is the first on the list, and is mostly credited to the global financial crisis we are all experiencing – which it should be noted has it’s roots in the whole sub-chief lending disaster. Interest rates took a hike and people started losing jobs. Many people entered into a loan agreement without reading the fine print, and it is just too late when they realized that that they could not keep up with the monthly amortizations because of the high interest rates. So if you are considering of taking on a mortgage, it is best to read the contract several times and look out for hidden charges. Better however, consult a lawyer and be basic of the contract before inking the deal.
The most shared reason for home foreclosure typically involves one’s ability to manager money. Spending beyond your method, gambling and addiction more often that not rule to home foreclosures. So get a grip of yourself and get rid of these bad habits before you find yourself unable to keep up with your financial obligations. Bankruptcy is an option that will allow you to keep your home.
Terminal illness and death may also gravely affect your mortgage payment ability. The best thing to do is to include health insurance in your budget and religiously pay the amortization on time. In the event of terminal illness, you don’t have to divert your mortgage payments for hospital bills. It will be much worse if a loved one is on the brink of death while the whole family is also in danger of home eviction.
In situations where defaults in mortgage payment are unavoidable, here are a few tips where you can take control of the situation and act upon it closest:
Do not attempt to disregard the situation and hide from your lender. Talk to your lender and explain your situation. You can restructure your loan and extend the terms consequently lowering down your monthly amortizations.
You can also sell your other assets, like your second car or numerous electronic gadgets. Who needs an iPad, iPhone, Playstation, iMac, Blackberry all at the same time? For the meantime, you may only make do with your Blackberry and Laptop. The rest, you can live without. You can add the sales proceeds from these additional assets to pay off your defaulted mortgage payment.
Personally negotiate with your lender and avoid hiring foreclosure prevention companies. They may be authentic but they tend to ask for a huge fee which may be equivalent to two months of your monthly amortizations.
There are many reasons why homes get foreclosed and some of them are unavoidable, like the global financial crisis. But for the other reasons you have control of, like overspending or being financially irresponsible, it is best if you get your act together the soonest possible time or else, you might find yourself living in the streets.