Avoid Real Estate Foreclosure
Roohan Realty Offers Advice to Avoid Saratoga Real Estate Foreclosure
Q: It seems we hear more and more about foreclosures on real estate. What is foreclosure and can it be avoided?
A: Deanna Wolfe of Roohan Realty: There have been many news reports lately about the current wave of real estate foreclosures throughout the country. During the overheated market of 2-3 years ago, many people bought homes with mortgages they could not keep up with. As a result, over one million homes in the U.S. are headed to foreclosure. Wondering what foreclosure is?
Real estate foreclosure is a legal process whereby your lender can take ownership of your home. It can be a devastating event. The process begins with the first missed mortgage payment. Your lender will remind you to pay and if you do not respond or send payment, you will be put into collection.
Usually your lender will work to help you get back on track with payments. However, if after three to four months you still fail to make a payment, your lender will send a default notice to both you and the county you live in. At this point, without a payment, you will be evicted, the county will set a foreclosure date, your property will be auctioned and the proceeds of the sale will be used to pay off the mortgage and any other unpaid debt on the property.
Foreclosure means you will lose your home, everything you've invested in it and ruin your credit rating for many years to come.
There is some hope for homeowners with financial difficulties. Most lenders do not want to throw people out of their homes. Lenders can offer assistance through repayment plans, loan modifications, a refinancing of the entire loan, or a short refinance.
These programs work with the homeowner to keep the home and get their payments current and back on schedule. If you truly cannot afford your home, the lender will offer a pre-foreclosure sale, short sale, deed in lieu of foreclosure, or filing Chapter 13 bankruptcy as options.
Real estate foreclosure can be avoided. When you first buy a home, do not to spend more than your budget will allow. If a mortgage package sounds too good to be true, it probably is and may put you at risk. The mortgage payment is the largest expense most people have each month. Talk with your lender to make sure you understand all the terms of the loan and are on target with the monthly expenses and where they might go.
Think about establishing a reserve fund to cover several months of mortgage payments to get you through unexpected downturns in your finances to make sure you're covered. Finally, should you find yourself unable to make current or future mortgage payments, contact your lender immediately.
Late fees and legal charges will start to add up each month you miss a payment. Mortgage lenders would rather not go through the process of foreclosure, repossessing and selling the property. Call them early and ask them help you work it out.
Plan ahead, don't overbuy, and keep your mortgage payments on schedule! This will help keep your home and credit rating free from the clutches of real estate foreclosure.