Avoiding
Foreclosure
If you don't pay your monthly mortgage payments over a period
of time, your mortgage lender (the organization to which you send
your monthly mortgage payments) can foreclose on your home. This
means the lender will take the title to your property for
non-payment and then sell the house to recover the amount you owe
them in your mortgage.
The foreclosure becomes part of your credit report and may
tremendously affect your ability to secure credit in the future.
To avoid foreclosure, you should save enough to cover 3-6 months
of your housing costs to help with unexpected emergencies, like
job loss, divorce or separation, serious illness, or the death of
a loved one.
If you're having financial problems, contact your mortgage
lender immediately. Most lenders would help you remain in your
home and will work with you to help you avoid foreclosure.
- What if your problem is temporary?
You can ask for new payment arrangements. Be sure you ask your
lender how this will affect your credit record.
- What if your problem is long-term or permanent?
Your lender may be able to change the term (s) of your
original loan, or you may qualify for assistance from a local
government agency or a nonprofit.
- What if keeping your home is not an option?
Even in the worst case, you might be better off selling your
home and paying off the remaining mortgage. Any additional
income (your home's equity) from the sale would still be
yours.
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