EASY GUIDE TO HOME FORECLOSURE: WHAT IT IS AND HOW IT HAPPENS
Foreclosure is a scary word. You might be worried that your home is in foreclosure, or that it will be soon, and you aren’t sure what to do. It’s okay—we get it! Foreclosure can feel confusing and overwhelming, but it doesn’t have to be. We’re here to help you understand what foreclosure is, the loans to stop foreclosure and how to handle it if it comes up for you or your family.
What is foreclosure?
Foreclosure is when a lender takes steps to repossess property after the borrower has failed to make timely payments on their loan. The property is usually sold at auction by the lender and the proceeds are used to pay off the debt owed by the borrower.
How does foreclosure happen?
Foreclosure happens when there are not enough funds available to meet all of your debts and obligations as they come due. This means that if you miss a payment on any one of your loans or bills, your credit score will drop significantly—and if it drops too low, then lenders may refuse to grant further credit because they don’t see you as a desirable risk anymore!
Different steps to take to avoid foreclosure
If you’re having trouble paying your mortgage, there are things you can do to make sure your home doesn’t go into foreclosure.
* Talk with your lender about a loan modification. If you’ve been having trouble making payments and are behind on payments, talk with your lender about getting a loan modification. This is where they reduce the terms of the loan or lower your monthly payments so they’re more manageable for you. They may also reduce interest rates or principal amounts owed on the loan.
* Contact a HUD-approved housing counselor or an attorney who specializes in foreclosure law. They can help you determine if there is anything else that can be done to avoid foreclosure, such as refinancing or restructuring your loan with another lender.
There are a few key factors in foreclosure and the main one is missed payments, or not being able to pay your mortgage. If you’re having trouble keeping up with your mortgage, don’t ignore it. Your lender may be willing to work with you to help. There are government programs as well that you can inquire about as your last resort just before foreclosure.
Monica Davis, Operations Manager for Home Savers Community Group. Specializing in assisting property owners with saving their home with a property tax loan.