Avoiding the Most Common Foreclosure Pitfalls
At one time foreclosure was something that relatively few people had to
worry about. In light of the current economy; however, an increasing
number of people have found themselves either concerned about
foreclosure or actually facing the risk of losing their home. Therefore,
it is important to learn what you can do to protect yourself from the
risk of foreclosure as well as what you should do if you find yourself
facing a potential foreclosure.
First, it is important to get in the habit of saving up for a rainy day
or emergencies. One of the most common mistakes that many people make is
not having a solid plan in place for emergencies through savings. In
today’s economy, if you should be laid off, reality dictates that it
could take some time before you find another job. If that happens, you
need to be prepared to cover your expenses, including your mortgage,
with savings.
In addition, you need to make certain that you never miss even so much
as a single month on your mortgage payments. Keep in mind that skipping
even one month can greatly affect your credit and can also cause your
lender to scrutinize future loan applications even more seriously. That
can put you at greater risk for being rejected for any future mortgage
applications.
If you find yourself in a dire situation where you are not able to meet
all of your monthly financial obligations, one of the worst things you
can do is to ignore your lender. Realize that it really is in the best
interest of your lender to assist you so they can continue to receive
payments on a regular basis. Banks do not want to foreclose on mortgage
loans. It is time consuming and costly for them. The would much rather
assist you in getting back on your feet and keeping those mortgage
payments rolling in, but they cannot do that if you ignore them.
Ignoring the situation will not improve it. It is far better to go ahead
and face up to the situation and discuss it with your lender to find out
if there are any options available that may be able to assist you.
In the event that you have missed one or two payments, avoid the
temptation to avoid paying subsequent payments. The best thing you can
do at this point is to pay whatever you are able. This will help to
justify to the bank that you are at least trying to back pay what you
owe as you can and that it is not your intention to turn your back on
your financial obligations.
If your situation turns really dire, do not fall for foreclosure
prevention services that are often targeted at homeowners in trouble.
The fees for such services can easily reach into the thousands and can
sometimes still even result in the loss of your home. Basically, all
such services do is contact your bank on your behalf and make a request
for a loan modification. This is something you can do on your own
without anyone acting as an intermediary and certainly without paying
thousands of dollars.
With that said do not ignore the opportunity to take advantage of
resources and programs available through the government. Homeowners who
find they are no longer able to afford their mortgage as the result of
an adjustable rate mortgage being reset as well as homeowners with
interest only loans may be able to benefit from a program available from
the Federal Housing Administration.
If your lender begins the foreclosure process, do not ignore the
situation and ignore deadlines that are established. While bankruptcy is
not an ideal situation, you may need to consider it as an option.
Consider consulting a financial expert to determine whether bankruptcy
could possibly assist you. Depending on the state in which you live, the
amount of time left once the foreclosure process has been started can
vary from as long as several months to as little as a few weeks.
The first moment you realize you are in trouble with your mortgage you
need to take steps to address the problem. Ignoring the situation will
only make it worse and could result in diminishing the options that are
available to you which could actually help you to avoid the loss of your
home. Take the time to explore all of the options that are available to
you before you face the risk of losing your home and having a black mark
placed on your credit that will haunt you for years into the future.
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