By By Lora Davis |
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The word “foreclosure” is one word that a homeowner does not want to hear because they can lose their home. This is especially true if you default in making timely monthly payments. When a homeowner buys a home, they intend to make their monthly payments on time but unforeseen events can happen and affect your financial situation. You could lose your job, have a health problem that causes you to miss several days or weeks of work, divorce, etc. If you have a situation that could affect you making your monthly mortgage payment on times you will need to take immediate steps to avoid possible foreclosure of your home.
If there is no way that you can make a monthly payment contact the mortgage it. They may be able to give you some options that can include:
• Forbearance-this is a temporary agreement to delay for a short period of time the mortgage payment. You will have to convince the lender and prove to them that will have some money soon and will be able to make a payment when due without fail.
• Loan modification-the mortgage company could decrease the interest rate, which will reduce the monthly installment. Aside from the loan modification, the mortgage company may also agree to extend the amortization period. The amortization plan is the length of time it will take to pay off a mortgage in full.
• Repayment plan-this is where the missed monthly payments are divided, then added to the remaining monthly payments. For example if you pay one thousand dollars a month and you have been in default for three months that would be three thousand dollars. This money would be distributed equally among the remaining monthly payments. If you have fifteen months left on your mortgage then the monthly payment would be one thousand two hundred dollars.
• Refinance-the missed payments would be added to the balance of the loan. The amortization period would also be extended. Sometime you may get a lower interest rate.
• Partial claim-in some government loans some borrowers are provided with another loan so they can pay back the payment in default.
• FHA Secure-this is meant to help people avoid foreclosure when they are in default. There are different conditions and terms for determining if a person is eligible for this option. This is a program is implemented by the Federal Housing Administration.
Before you purchase a home, you should have a budget written out so you know how much you can afford each month for a mortgage payment and do not over extend your budget. This is the first step in ensuring that you do not default on your mortgage and face foreclosure.