Mortgage Foreclosure Process Explained Simply
The latest statistics show that there are already hundreds of thousands of people who lost their homes from 2007. Although homeowners buy houses with the honest intention of paying for the monthly mortgage, unexpected things happen. The most common is job loss. When a homeowner loses his job, the payment for the mortgage will naturally be channeled to a more urgent need such as food.
It is easy to understand mortgage foreclosure process. It starts when you failed to pay your monthly mortgage. Laws about foreclosure differs from one state to another but this is what usually happens during a foreclosure. Let’s say you are supposed to pay every 15th of the month for your home mortgage. You failed to pay this month. Let’s say, for the purpose of explanation that you failed to pay your dues for January 15.
You’ll be given a grace period from January 15 to January 31 to settle it without any added fees. Once February 1 comes, you will be assessed with late payment fees. Late payment fees are usually a percentage of your balance. If the late payment fee is set at 3%, you need to pay an additional $100 if you have a $300,000 home loan. You need to pay $100 in addition to the monthly payment. By this time, the lender will have been giving you calls about your mortgage.
When February 15 comes, you will receive a letter saying that you are in default and that your home has the possibility of being foreclosed if you didn’t pay. This is 30 days after you stopped paying for the mortgage.
When Mar 1 comes, mortgage collectors will start calling you and asking you for the payment. Lenders will do everything to help you prevent mortgage foreclosure because when your home is foreclosed, almost half of the value of the credit will be slashed. When you still can’t find any solution to your mortgage problems, they will send your case to their legal department and the foreclosure procedure will commence.
When April comes, you’ll receive a Notice of Default from the legal department. Some states don’t need a court trial. A sheriff will come to your house and advise you to leave. In some states, a legal proceeding in court happens.
The best way to prevent mortgage foreclosure process from happening to you is to know everything about it. Talk to your lender about the things that you can do to prevent it. Finally, research about your state’s laws regarding mortgage foreclosure and update yourself on news about this topic. Although certain things cannot be avoided, there are still a lot of homeowners who are able to prevent the foreclosure of their homes.
