Potential eviction is something most people don’t think about, and especially first-time homebuyers. Any homeowner can have things happen to them that cause them to fall behind on their bills and face delinquency on their home loan. What can you do to avoid foreclosure in a case like that? Here are some tips on the different options available to you.
time is of the essence
Just the basic idea of foreclosure can be horrible and very frustrating. However, you must face the problem head-on to prevail. You don’t want to procrastinate or procrastinate. This will only make things worse.
Lenders are in the business of lending money not by eviction or foreclosure. The steps of foreclosure are costly for everyone involved, but lenders will do it when they need to protect their assets. Make sure that if you are going to miss a payment, you talk to your financial institution right away.
Prevent a Notice of Default
A Notice of Default is a public record issued by the bank or lender stating that you have defaulted on your mortgage payments and if these payments are not paid, the home will be forfeited. In some areas, this log is also attached to the front window or door of the house itself.
This is not something that happens overnight. Different states require a certain amount of late payments before a public notice can be filed. This is to protect the current owner from being kicked out without having a proper opportunity to work out the problems and delinquencies. Use this time to your advantage. This time will differ from state to state, but generally, after your first late payment, you will receive a notice letter. After the second, you will start receiving phone calls. Typically, for the third late payment, you will risk receiving a Notice of Default which will give you a certain amount of time to make arrangements before they come to take your home. After the fourth late payment, the lender will begin the foreclosure process and will almost always put legal fees on what you already owe them.
This means that for most people, they had three to four months to work out some kind of plan with the lender, but they didn’t. Once foreclosure proceedings begin, it is more difficult for lenders to discuss alternative financing options with you. So what can you do to prevent lenders from repossessing and selling your home?
Talk to your lender
Depending on your situation and how soon you choose to act, you may still have a variety of options to help you avoid foreclosure. After talking with them, lenders can agree to:
Forbearance: If notified in a timely manner, lenders declare that they will not take legal action against you. Therefore, this gives you more time to make payment arrangements between them.
Debt Forgiveness – This rarely happens, so don’t count on this. But on rare occasions, lenders decide to waive a late payment with the promise that you will pay all other mortgage obligations.
Payment Plans: Lenders may allow you to slowly pay off missed payments by increasing the monthly amount over a set period of time until you’ve made up for what you missed.
Loan Modification – When rates are rising, lenders will freeze the rate to give you time to make payments.
Partial claim: Depending on your circumstances, you may qualify for a government loan that will allow you to pay off your debt.