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Foreclosure


Foreclosure is not a word that many homeowners love to hear and it might even put them in a panic. A foreclosure is what happens when a homeowner does not make the payments on their mortgage, causing the lender to put the home into a state of default. The lender goes through a process that helps him to regain the possession of the house and then the home will typically be sold through a public auction or sale. When it is sold, the house is officially considered to be foreclosed on. Sometimes the lender allows the homeowner to try and sell the home quickly using a short sale, which means selling the home at less than what you owe, so that foreclosure will not have to happen. In this case, the bank has to agree with the final price that the home is sold for, and if they accept, they just take the lower amount for the full payment on the mortgage that is owed. 

 

One very nice thing about foreclosure is that if the homeowner is able to pay back the amount that is overdue and current during any moment in this process, they may do so to avoid the foreclosure. One way that people might do this is by getting a mortgage refinance so that they can pay off the current loan and start new. Mortgage refinancing might make the monthly payments lower so that the homeowner will be more likely able to manage the payment each month. If you have a bad credit mortgage, you can still refinance if you think there is enough equity in your home. 

 

Many people think that if you are going through foreclosure that the whole process will take many months or even years for it to be done with. This is not always the case, as it often happens fairly quickly. Another myth is that you have to be ninety days or more past due on your house payment in order for the bank to start foreclosure, but in actuality, the bank can begin foreclosing on your house if the payment is forty five days late. Different laws apply in different states, but there are some states that allow the lender to force the person out of their home if there has been six months of missing payments. Sometimes the lender will decide to allow you to stay in the home while you are finding other living arrangements, but it must be done quickly; you cannot drag your feet on finding a new dwelling. 

 

You will probably know well ahead of time if you are having financial difficulties and might have trouble making a payment. If you communicate with the lender, they will be able to help you, possibly helping you to refinance your mortgage so that your payment can be lower so you don’t end up having a way past due payment. Because rates are so low these days, it is very possible to refinance and have your payment lower than it is now. If you have missed payments but you haven’t made an effort to contact the lender before hand, be sure and be honest about everything. If you avoid phone calls from the lender, they will assume that you don’t really care about what is going on and will be less willing to help you. If they have no contact with you, they might just automatically begin the foreclosure process without you even realizing it. There are other options for you if you are willing to be honest and communicate with the lender. If you missed only one payment and can get back on track, they might just add a couple months to the end of the loan so that you can pick up and not fall behind again. If you have lost a job and have a lower income, the lender might consider doing a loan modification for you.