Being unable to pay the mortgage is one of the worst fears of home owners. When a person faces a prospect of losing is home he feels very discouraged and demotivated. In each state, there is a different process for foreclosing a house. Some states require that a lender does it through court while others do not require such level of legal processes and procedures. There is a process which starts whenever a person skips his mortgage payments.
- Lender normally requires you to pay the mortgage on first of every month. But there is a grace period according to which you get time until 15th of each month to pay the mortgage. If you still don’t pay until the 15th of the month then your payments are recalculated and it is considered as the law breaking an act.
- Not later than 16th you will get a notice or phone call. It is a warning call that you will get. However, it is not until 30th that the lender finally takes a legal action and contacts the credit bureaus. If the credit bureau puts that on your record then your credit score can take a serious it. It could be up to 100 points as well.
- After 30 days when credit bureau updates your record then you officially become a defaulter. Between 45 to 60 days you get a notice about your mortgage. Its main purpose is to inform you that at this point foreclosure will happen if you don’t pay the mortgage.
- 30 days late on a mortgage payment is the alarming point because it starts affecting your credit score after this. However, the actual foreclosure process starts after 90 days when your credit score further goes down almost 20 to 30 credits.
- The process of foreclosure variates from state to state. In some places, it takes just another 90 days while in others it can go up to 3 to 4 years. After the process of foreclosure is complete the bank officially owns your house and most of the time they try to resell it. If you can bring your payments up to date during this process then you can stop the foreclosure. At times, lender presents the offer of a short sale if that option benefits him.
- It is better to be proactive instead of being reactive in these situations. When you know that you won’t be able to afford the mortgage for a month then instead of waiting you should contact your lender right away. Tell him about all the problems. In such cases, you might get eligible for refinancing or loan modification. So it’s better to not let things get messy. Take control of the situation before it gets out of hand.
- Financial problem is something that can happen to anyone. At times, people find it difficult to talk about their financial issues with their lenders. They get embarrassed and awkward. However, you should keep in mind that it’s better to control the small issue instead of handling a big one.