When you’re shopping for a new Breckenridge home, the last thing you’re thinking about is the possibility of foreclosure. As a Realtor, it’s not something I bring up very often, but it is a reality, and life events that we hope will never happen–such as a lost job, a divorce or a sudden health problem–can make foreclosure a possibility.
Today I want to take the time to offer tips on how you can avoid the foreclosure process. The good news is that even if you experience circumstances that could lead to losing your home, there are still things you can do to protect this important investment.
Contact Your Lender
Banks and lending institutions are in business to collect mortgages and interest. They do not want to take on the ownership of your home. That’s why it’s always a good idea to let your lender know about your current situation, if you see a financial problem ahead.
There is a chance your bank will be willing to help you figure out a way to keep your mortgage in good condition. Even if your credit has taken a big hit, though, it’s better to reach out to your lender sooner than later. The longer you wait, the greater the chance that your lender will simply decide that foreclosure is a more cost-effective choice.
Steer Clear of the Spiral
If you start missing payments, it won’t take long to enter the foreclosure spiral. This happens once your loan payment is sixteen days overdue. Your mortgage lender will contact you at this point to work out a method to ensure your mortgage is current. However, if you are short on funds due to an expense you didn’t anticipate or some sort of severe income loss, it may be difficult to make up that missing payment.
Still, there are options that can help you stay up to date. For instance, your bank could give you the opportunity to pay one month’s mortgage in two installments over a certain amount of time.
A loan modification is another choice that could be offered to you. Under this structure, your interest rate may be lowered and the length of your loan extended in order to make your monthly payments more affordable.
Then there’s something called a short refinance. This process occurs when your bank forgives a part of the mortgage and refinances the rest into a new loan.
Don’t forget that you can also choose a short sale. It’s possible that this would be a last resort, particularly if you wish to remain in your home. However, if your circumstances are dire enough, you might want to explore selling the home for less than the outstanding loan amount. Keep in mind that you will need your lender’s approval to go this route. When the sale is complete, the bank will take the proceeds and you won’t be liable for any other debt related to this property.
Want More Info?
Negative life events are a possibility, but financial problems don’t necessarily mean you will lose your beloved home. I hope this blog helps you understand the options that could be available to you in case you’re facing foreclosure. There are steps you can take to avoid this devastating experience.
If you need to buy or sell a home in Breckenridge or throughout Summit County, let me know. I can put together some properties that might suit your tastes. If you’re just beginning your research, start by looking through the updated listings on my website. When you’re ready to explore your options or prepare for showings, contact me at any time via email ([email protected]) or on my office line. I look forward to working with you!