Ways To Avoid Foreclosure
Being faced with financial hardships is tough for anyone trying to make all of their monthly payments. Creditors are not very forgiving and the pressure to stay current on your accounts can become overwhelming. When you fall behind on your payments, your credit is affected and you now face the threat of losing any property you possess through a loan. Your home mortgage is no different, and lenders don’t hesitate to place your home into foreclosure if you are even 1 month behind in your payments. The Lee Law Firm has developed a list to simple tips to avoid foreclosure.
Buy Within Reason
Don’t but a home that is at the top of your price range. Although you can afford to make the payments at the time of purchase, you may not be able to make those payments in the event of an unexpected financial hardship such the loss of your job or significant medical debt.Calculate how much you can pay for a mortgage while allowing for your other bills and savings each month.A general rule of thumb is that your mortgage should not be more than 30% of your monthly income, after taxes. A more conservative rule would estimate your mortgage payment to be at or below 25%.
The Lee Law Firm know how it feels when money is tight, and we seek to provide services to help you budget your money and prevent your home from going into foreclosure.
Consider all the Fees Associated with Homeownership
One mistake people often make is forgetting to account for the additional costs of homeownership. You will need homeowners insurance to cover any risk of damage to your property, property taxes and homeowner association fees will also add to your month costs. Many people don’t realize how much utilities will cost each month in comparison to the apartment or smaller dwelling they are used to. It is a good idea to ask about these additional costs before you decide to purchase a home.
Shop Around for the Best Loan
There are plenty of mortgage lenders offering enticing loans to buyers, but as the consumer you have the advantage of shopping around to find the best deal. It is a good idea to check the lending companies score with Better Business Bureau(BBB) before deciding on which lender is best.
Be cautious of unconventional loans like adjustable rate mortgage (ARM) or interest-only loans, they often have many hidden terms that buyers may not have considered. These types of loans will include increases in the interest rate over time, which can significantly increase your monthly mortgage payment. It is best to look for a fixed interest rate loan, so you can be sure you know what your monthly payment will be over time.
Contact Your Lender at the First Sign of Trouble
As soon as you begin to experience a financial hardship, contact your lender to review your options. Many lenders will work with borrowers to make changes to their loan terms that suit there changing budget. These mortgage loan modifications can reduce monthly mortgage payments and protect your home from foreclosure as you catch up on late or missed payments. The lender has many options to assist you when you are late or have missed a single payment.
However, your options become more limited the longer you default on your mortgage loan. Once the lender has begun the foreclosure process, your only option might be to proceed with a deed in lieu of foreclosure or a short sale. Often times the negotiation process can be difficult, let one of our experienced attorneys assist you with the negotiation process.
Make the Necessary Arrangements
If you are working on a plan to catch up on late or missed payments, obtain all the paperwork necessary to prove your financial hardship to your lender. This may include copies of your medical bills if facing large medical debt, unemployment stubs if you are collecting unemployment after being laid off, or copies of job applications showing your intent to obtain another job. G
et a second job in order to gain extra income towards your mortgage payments. If you feel comfortable, you may also consider asking friends or family for financial help to provide a short term relief from the financial pressure to maintain your mortgage payment. If you have expendable assets, such as boats, cars, jewelry etc, consider selling these assets in efforts to be able to make your mortgage payments while your financial hardship is passed.
Contact a Qualified Financial Management Service
There are many debt management and financial planning services that provide assistance to people looking to change their financial situation. The most important thing is to obtain a reputable company, which will staff credentialed employees. Be cautious of any company that is trying to “sell” a service rather than help organize your finances and develop a debt relief plan. The Lee Law Firm is committed to providing their clients with objective advice and personalized service. We aim to help consumers facing foreclosure keep their homes.
Get to Know Your Rights
Becoming an informed consumer is the best way to protect yourself when you take out a mortgage loan. Make sure you know the details and conditions of your loan terms and always ask questions if you don’t understand something. If you have defaulted on your loan, there are many state and federal laws that protect consumers who are in the process of managing their debts. Review your rights with an experienced debt relief agency to make sure you have exhausted all your options to prevent your home from foreclosure.