There’s an unfortunate stereotype surrounding people whose homes are in foreclosure. Many assume that these people are financially irresponsible and that’s why they’re unable to keep up with their mortgage. While this may sometimes be the case, poor spending habits isn’t the biggest culprit. Most foreclosures are the result of unforeseen circumstances outsides the homeowner’s control such as a medical emergency, sudden job loss or decrease of income, or the death of the primary financial provider. Many people wait until the foreclosure process is well under way to get help to try and save their home. But there is much homeowners can do to protect themselves from foreclosure by being proactive about their mortgage problems. Here are five situations in which homeowners would be wise to seek help about their mortgage troubles.
A new budget
At one time or another, everyone will have to sit down and reorganize their finances. Whether there are more expenses or there is a long term financial goal that needs to be saved up for, sometimes its necessary to make income stretch a little further. Often, this reorganization of the budget includes the mortgage. Some homeowners might apply for a loan modification. Some may consider a second mortgage. These are serious financial decisions that should be well thought out. It never hurts to consult a professional’s opinion.
Unexpected major expenses
Sometimes a perfectly good budget can be ruined by an unexpected expense. Whether it’s medical bills, the need for a new vehicle, or a major home repair, the new expense can make it difficult for homeowners to keep up with their mortgage payment. If a new expense will make paying the mortgage a difficulty, homeowners can speak with a housing counselor to explore their options.
Decrease in income
Sometimes the problem isn’t an increase in expenses but rather a decrease of income. Sudden job loss or a cut in wages can make paying the bills nearly impossible. Again, speaking with a professional such as a housing counselor can help homeowners from falling behind on their mortgage by exploring options such as a loan modification.
When mortgage payments change
Sometimes the mortgage payments can increase dramatically, perhaps the interest rate on the mortgage increases suddenly. When the mortgage payments are suddenly higher than they used to be, many homeowners fall behind. Again, they can seek help to see about getting a loan modification.
Major life change
Finally, other life circumstances such as divorce, the death of a spouse, or a disability can throw a wrench in homeowners’ plans. Each of these situations is difficult financially and emotionally and homeowners may have a hard time viewing their options objectively. Fortunately, there are professionals who can help homeowners to explore these options in order to avoid foreclosure.
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Source: aarp.org/aarp-foundation/our-work/housing/info-2014/when-to-get-mortgage-advice.html