Avoid Foreclosure: Seeking Alternatives Proptly Can Save Your Home By Sharon Secor, Staff Writer Mortgage foreclosures are happening at a startling
rate in today’s market, making it more important than ever for consumers
to be aware of the facts involving home loan default and foreclosure.
The most recent statistics gathered by the Mortgage Bankers Association
show a record setting number of foreclosure filings, the highest since
their survey began 55 years ago. Some sources are citing a ninety percent
rise in foreclosures in the twelve month period between May 2006 and
May 2007. However, borrowers can avoid becoming part of this trend
with a bit of foresight and quick action at the first sign of trouble
with their home loan. Unforeseen circumstances
can effect even the most fiscally responsible among us, causing financial
strain and missed or delayed payments. Homeowners can fall behind
in monthly home loan payments due to an unexpected change in employment
status, a sudden accident or illness, or a death in the family. If
not properly handled, such issues can lead to home foreclosure. However,
in most circumstances, foreclosure can be avoided if the consumer
is proactive in addressing financial problems. Among the
most frequent mistakes made by consumers who are facing financial
difficulties is poor communication. While discussing the problem
with your lender can be uncomfortable and intimidating, it is crucial
to avoiding foreclosure. Most lenders are as interested in avoiding
the foreclosure process as you are, and will work with you to find
a solution that can save your home. Most
lenders make a variety of programs available to borrowers who
find themselves embroiled in temporary financial difficulties,
meant to help avoid foreclosure. Loan modification agreements
are quite common, allowing the borrower to spread the outstanding
balance out over time, or a simple re-payment agreement may be
all that is necessary. Some lenders will offer a financially
troubled borrower the option to defer payments or interest for
a fixed amount of time, allowing a bit of time to put matters
in order. This option will extend the term of the loan, but can
be very advantageous in a short term financial crisis. Much
of the recent upswing in foreclosures has been associated with
variable rate loans, or ARMs. These types of home loans often
offer a low interest rate initially, and then adjust to reflect
the prevailing market rate on a predetermined rate adjustment
schedule. Interest rates on many of these loans have risen
significantly in the current economic climate, leading to much
higher monthly payments in many cases. Borrowers
that financed a home purchase with any of the many types
of variable rate mortgages on the market today may find refinancing
into a fixed rate loan to their advantage, especially if
it is done before payments become unaffordable. Refinancing
is easier to arrange if it is done before your credit rating
is affected by late or missed mortgage payments. A careful
review of the original loan agreement to determine exactly
what your payment will be after the next adjustment can allow
the borrower to anticipate trouble well in advance, giving
ample time to plan a solution. Acting
quickly is the key to avoiding foreclosure. While it can
be difficult and embarrassing to admit financial problems,
avoiding it can only compound your problems. The longer
you wait to address the issue with your lender, the fewer
options you will have in solving your problem. Calling
your lender immediately when circumstances arise that could
cause late or missed payments shows good faith. With a
clear indication of your commitment to meet your financial
obligations, lenders will be quite likely to work harder
to find the right solution to help you through your financial
difficulty. Useful Resources: | 