When picturing the thought of your home, comfort should be the first thing to come to mind. In a perfect world, the stresses of our day should melt away as we walk through the door. What if what’s interrupting that is the realization you’re about to fall behind on paying the mortgage? This is the worst fear for most Americans and an unfortunate reality for all too many of us. What Happens if You Can’t Afford Your Mortgage Payments?
What Happens if You Can’t Afford Your Mortgage Payments?
If the panic is dominating your life what is there to do? Thankfully there’s a few options to help out but don’t think this is something that can wait until tomorrow. The sooner you notice financial issues and then act, the better your situation can be. For those fearing foreclosure, here’s the details of what that looks like.
What Happens First?
The first thing to happen is a late fee that will come around 15 days after the payment was expected and the loan will go into default once it’s 30 days past due. After both of those dates have passed, the payments are turned over to credit bureaus and your credit score will start to be negatively impacted.
When your mortgage payment is skipped, that’s going against the agreement that was signed by both you and the lender. By not following through on your end of the deal, the lender then has the right to foreclose on your home in hopes to still receive their intended investment.
What Exactly is Foreclosure?
A piece of good news here is that it’s a process and not something that just happens overnight. As mentioned, this doesn’t start moving until around 2 weeks after your payment was supposed to come through. It’s not exactly something your lender is eager to do either as they are going to try other methods to collect payments before going through the stressful and time-consuming effort that is a foreclosure.
Foreclosure won’t simply start after one set of late payments but that doesn’t mean anyone should feel comfortable with paying late. The process really starts after around 3 months of missed payments but at any time during this period there will always be the opportunity to work something out with your lender.
How Can Foreclosure Be Prevented?
The best strategy is to be ahead of any missed payments as possible. If the money simply isn’t there, think of this in terms of communication. Don’t feel a lender doesn’t understand what might be happening. This is their job; they are familiar with the situation and the details for all your possible options. Typically, the possible lanes for coming to a resolution are going to come down to a few different options.
These will be things such as refinancing, forbearance, a modification of the loan or a changed repayment plan. For those looking to get ahead of a situation like this, don’t feel like there’s nothing to do until you are on the phone. There’s plenty of resources online, such as using a house payment calculator, to make sure the house you already have (or another one you are considering) is going to add up to what you need numbers wise.
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