By: Martin Lukac
Foreclosure is something that we all strive to avoid. No one gets a mortgage with the intention to default on it causing the lender to foreclose. But the thing is that life happens and sometimes you just cannot pay the mortgage payments. This could be due to any number of factors, job loss, death in the family or even an accident of some sort.
It is not only you that want to avoid foreclosure the lender doe not want this to happen either. They make their money off of the interest you have to pay on the mortgage and if they need to foreclose they will not be getting this interest so most lenders will be willing to work with you and your circumstances to keep your mortgage moving along.
If however they do not see you getting through whatever trouble you seem to be having at the moment then they probably will not bother even trying to help you but if they think you are worth the risk they will take it.
The only way to get your lender working with you is to let them know what is going on. If you are having trouble meeting your payments tell them right away and tell them why. If you wait until you get way behind on your payments then you will lose all credibility and any trust that the lender had in you will be lost.
As soon as your mortgage payments gets behind by as many as 16 days then they will give you a call to see what the hold up is and if there is any way that you can get the account paid up to the right amount.
Once a month has past and they have not heard from you and you have not made a payment they are going to put more effort to get in touch with you. The first time they may have got you or may not have but now they will keep calling until they get you on the phone. After 90 days you could be dealing with foreclosure.
Throughout this time frame the lender will have sent you letters letting you know what is coming and that you have broken the terms of your contract. The first of these letters will go out around day 45. Your house would actually be sold as soon as day 150. This will happen at auction. Just when this will take place depends where you live as different states go about foreclosures in different ways. It is important to note that some states will even let you purchase your home back from them after foreclosure. There will be a period called a redemption period.
If you are having trouble paying your mortgage payments on time talk to your lender about a repayment plan. This is especially handy if you only missed due to a temporary problem like an accident that cost you a lot in medical bills. Some lenders will allow you to pay off the missed payment over two or three months so ask.
A flexible mortgage lender might even be willing to rework the terms of your mortgage in order to lessen your monthly payments. To do this they will have to lengthen the amortization schedule. Lenders can even roll the missed payments back into the loan and lower your interest rate. This can go a long way to make paying your mortgage possible even for those having financial difficulties.
There is another rather unpopular option and that is a hard money loan. These loans do not have great terms, in fact they have high interest rate and tons of fees but the can be your saving grace. These types of loans can give you the time that you need in order to sell your home before the lender forecloses on it.
A somewhat less likely scenario is that you sell your home and even if you get less than the amount of money that you owe the bank will allow it and accept the money that you get an forgive the rest of the loan
