Introduction
Foreclosure is a serious issue for the American homeowner. In fact, it’s the second-most common form of debt collection in the U.S., according to RealtyTrac. Foreclosure occurs when homeowners are unable to make their mortgage payments and end up losing possession of their home. Says Wade Kricken , not all foreclosures are bad news—sometimes they can be beneficial for both parties involved (for example, if you’re underwater with your mortgage). But even so, many people find themselves facing foreclosure and don’t know what their options are or how best to proceed. In this article we’ll look at why it is important to take action early rather than later when facing foreclosure, how those actions might differ depending on whether you’re self-employed or have other income sources besides your job (or lack thereof), and which experts you should seek out for help once things go south on your financial woes list.
When a homeowner falls behind on their mortgage payments, they risk facing foreclosure.
When a homeowner falls behind on their mortgage payments, they risk facing foreclosure. A foreclosure is the legal process through which a lender takes possession of the property being mortgaged by the borrower.
In order to understand how foreclosures work, you must first understand what they entail and how they differ from other financial terms like repossession.
There are ways to prevent or delay foreclosure if you are faced with this scenario.
- Make your payments on time.
- Pay more than the minimum amount due.
- Pay off the loan in full.
Paying past-due amounts can derail your progress in other areas of your financial life.
One of the biggest drawbacks to paying off past-due amounts is that it can derail your progress in other areas of your financial life. For example, if you’re trying to get a mortgage or a loan for a car and you have past-due debt on your credit report, then that will affect whether or not you’ll be approved for the loan.
Sometimes, getting rid of one type of debt can actually make another type of debt worse. If you have student loans with a high balance but low interest rate, then paying off those loans might mean incurring more debt with an auto loan or mortgage (which usually have higher interest rates).
Foreclosure auctions occur only when the lender has exhausted all other options.
Foreclosure auctions are a last resort for lenders. The most common option for lenders is to work out a repayment plan with the homeowners, but this isn’t always possible.
Foreclosure auctions aren’t the only way to get rid of a house in foreclosure either: Lenders can sell houses on their own and then sell them at auction if they want to make more money. This means that some houses might not be sold at auction because they’re worth more than what was owed on them, so there’s no rush or need to do anything quickly unless you’re looking specifically to buy at an auction (which can be risky).
If you face foreclosure, take action early and seek out expert help to negotiate with your lender or file for bankruptcy.
If you face foreclosure, take action early and seek out expert help to negotiate with your lender or file for bankruptcy.
Foreclosure is a last resort—it’s expensive and time-consuming, so if you can avoid it by negotiating with a bank or seeking alternative methods of repayment like bankruptcy, do so. Your options are not limited to either foreclosure or bankruptcy; there are other options that may be available to you depending on the circumstances of your case.
Conclusion
If you are facing foreclosure and need help, there are a number of resources available. You can contact a lawyer or financial counselor to discuss your options and learn about other available programs.
