Life has a funny way of giving us lemons, while it is easy to say make lemonade very few of us have ever experienced the gravity of getting a foreclosure notice in the mail. Sometimes all it takes is one missed payment and then you are playing catch up, but ultimately falling behind on more than one bill. This economy does not make it any better and often leaves families choosing either to afford food for their families or make their mortgage payments. If this sounds like a situation that you’re in I want to let you know that you are not alone. In fact, foreclosures are on the rise and more families are experiencing the looming effects and are at risk of losing their family home. Before a foreclosure can happen there are plenty of tools you can use to halt the foreclosure process.
What is Foreclosure & How Does It Affect You?
When you miss a monthly payment on your mortgage the bank that holds the mortgage is alerted. After several missed payments the bank will proceed to file a Notice of Default to start the foreclosure process. Once filed the homeowner that is in arrears on the monthly payments will be served or notified via mail that the bank has begun foreclosure proceedings. The bank will want to sell the property so that any missed payments, outstanding balances on the loan, and property liens are paid. If the home sells for more than what is owed, then the homeowner has the right to collect the excess proceeds. The surplus funds can be collected by filing a motion at your local court or by hiring an attorney to collect these funds on your behalf.
Once a foreclosure is complete the effects are felt immediately. Foreclosure can cause a drastic drop in credit score. This deep impact will last for several years and prevent you from qualifying for another home in the near future. It may also affect your ability to qualify for rental homes or apartments if a credit check is a part of your application process. Utility companies may also increase deposits as they often require a credit check when activating services. Not to mention the stress and financial burden the foreclosure will cause it is best to avoid it at all costs.
Do Not Ignore Any Notices
Avoiding the problem and hoping that it goes away is not the answer. Trust me when I say that it may seem easier to turn a blind eye, but it will absolutely hurt you later down the road. Yes, that means you need to open up every notice that the bank sends you. Understand that I am writing from a place of compassion as I know that the guilt and stress you feel are heavy, but understanding where you are at will help us know where we need to go.
Reassessing Finances
Taking the time to see the big picture of your financial situation is the first step in overcoming the hurdle of foreclosure. The best way to analyze your finances is to determine how much is owed and calculate what it would take for you to catch up. This may be taking into account you working overtime or even calculating a tax refund that will help make up missed payments. If you are unable to free up additional funds to catch up on the missed mortgage payments then I recommend reassessing your finances to make sure that moving forward you will not
Speak With Your Mortgage Bank
If you find yourself unable to catch up on missed payments always speak with your mortgage bank. Often they have programs available to help homeowners avoid foreclosures. These often look like applying the outstanding balance to the end of the loan by increasing the loan term. Lenders may also be able to increase the monthly payments for a specified time to allow homeowners to become current on missed payments. Once the back payment is paid then the monthly payments will return to their original amounts. Speaking with the bank will help you put a plan into action to avoid foreclosure.
What To Do If All Else Fails
If a foreclosure is inevitable, Selling your home may be the right choice. This puts the power back into your hands and avoids a foreclosure on your record. Speak with a qualified real estate professional and determine the next steps for selling your home. Be sure that your real estate professional understands how delicate your situation may be and has had experience with handling foreclosures. They may need to speak with your lender and the attorneys that are handling the foreclosure. If you find yourself needing to sell, realize that time is of the essence. Waiting may not give your real estate agent enough time to sell.
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