Steps That You Can Take To Avoid a Foreclosure on Your Home
Foreclosures are a growing problem in the United States and other parts of the world.
A foreclosure, in simple terms, is typically when an owner of a property violates the terms of their loan (ie, doesn't make the payments) and the bank or lender repossesses the property for purposes of selling it to recoup their loan. Foreclosures are spiking in the United States and you need to know how to go about avoiding a foreclosure, because the results are obviously disastrous if the bank ends up taking and selling your home.
The first step to avoiding a foreclosure? Familiarize yourself with the terms of your loan. If you can't make sense of your loan's terms and conditions, then hire a lawyer to explain it for you. You need to know exactly what your rights are and what the bank's rights are before you go any further.
The next step? Stay in contact with your lender. If you are behind on your payments and they are sending you threatening letters, don't ignore them. Read all of the letters. Understand exactly what they are threatening. Call them up on the phone and speak to an agent. You might be surprised as to the options that are available to you.
Next? Understand that lenders DO NOT WANT YOUR HOME. Get this through your head and tattoo it on your forehead. Drop all of the "conspiracy theories" that somehow the bank is sabotaging you so that they can snatch your house up from underneath you. That's simply not how it works. Banks cringe at the thought of thousands of foreclosed properties on their books. They truly don't want another. Banks would be more than happy if everyone was able to keep paying off their mortgages with zero foreclosures.
Understand that there are ways to avoid foreclosure, even if you are behind on your payments. You need to call up your bank and ask to discuss various options, such as -
a) Forbearance - a common option. This will allow you to "freeze" your current loan so that you can make up the payments that you are behind on. Once you are caught up, the original loan will swing back into effect.
b) Note Modification - this can include modifying the current interest rate that you are paying in order to make it more affordable or extending the amortization period.
c) Refinance - increasing your loan balance to include your overdue payments
d) Debt Forgiveness - a bank will (sometimes) forgive a missing payment. This is quite rare and you should definitely pursue the other avenues that I mentioned first
e) Repayment plan - Spreading your back payment over a finite number of upcoming payments. If you owed $1200 for a missing payment, the bank may allow you to pay $1300 per month for the next two months to catch up
There are several ways that you can avoid foreclosure on your home. Times can get rough, and banks will understand that. They just want a client that communicates with them. If you ignore your bank then you are in for a load of trouble. If you are feeling the pinch, then call up your bank and see what your available options are. Arm yourself with information and you will likely find a way to keep your home. As I said, banks truly do not want your home.
Filed under: Real Estate News | The Economic Meltdown | General Knowledge