Dealing with Home Foreclosure when Suddenly Unemployed
If you’re faced with the threat of foreclosure, immediately seek advice from both non-profit agencies and for-profit companies that specialize in preventing foreclosure, and they can certainly help you restructure your mortgage. This will surely take that heavy baggage out of your chest, until you land into a high-paying job again, and therefore pick up the pieces and start saving again. Remember, always carry a determined and positive attitude, and you’ll surely find your way to economic recovery.
Reasons for home foreclosure
The ultimate reason for a home foreclosure is irresponsibility with loan payments, which may be due to the following reasons:
Unemployment
Unemployment is always directly proportional to home foreclosure. As the economy strengthens and weakens, so will home foreclosures go up and down. The key is to save a significant amount of money over your years of hard work, so you may be able to cover all payables in the future and therefore, avoid default payments. Because if you get laid off and cannot pay monthly dues resulting to a default home loan, foreclosure by your mortgage lender will definitely follow
Medical reasons Illnesses or hospitalizations consuming all your savings can lead to piling up of debts especially when you have no insurance to cover you. As always, the best thing to do is to save money out of each paycheck. But the truth is, many Americans live paycheck to paycheck, and so when prompted with a medical emergency, all savings go down the drain. The monthly home mortgage is then put at a backseat.
Rights of the homeowner
As a homeowner, you have to familiarize yourself with federal laws like TILA (Truth in Lending Act), HOEPA (The Home Ownership Equity Protection Act), and RESPA (Real Estate and Settlement Procedures Act), to keep you from making any violations and so that you’ll know how to fight back against abusive mortgage lenders. If you’re facing foreclosure or an interest rate adjustment, look through your loan documents and check if you were provided with a Notice of Right to Cancel, as well the dates on the notices. Make sure that the dates were typed in correctly, especially documents that disclose the three-day right to cancel. If the borrower was provided with a notice not containing the correct expiration date for rescission, you may sue your lender under TILA.
Negotiating with the lender
Remember that both borrower and lender never want a foreclosure to happen. Lenders only resort to foreclosure methods if their losses are shooting up. So, it’s always best to re-negotiate with your lender for a more affordable payment scheme at this time.
Lowering your interest rate
You may request your lender to lower your rate of interest monthly. And once the lender allows you to negotiate the loan, make sure you study the documents carefully, because most mortgage companies allow a lowering of the interest rate for only a certain period. Once it expires, they’ll raise the interest rate again.
Refinance the loan
Your lender may extend your payment term to thirty or even forty years to help you reduce your monthly payments. That way, paying your monthly mortgage will not be so hard on you. Also make sure you don’t have a balloon at the end of your mortgage term, where the lender will take a large sum of the amount you owe and add it on to the end of your loan.
Other available options
If you’ve exhausted all options and still you’re faced with foreclosure, you may avoid it by selling your property. Just make sure you’ll be able to sell the property in time so as not to put yourself at risk of not being able to pay off your lender on or before the deadline. Short sell by selling your property for a fraction of what its actual worth is. That way, you can retrieve your credit rating and avoid foreclosure that could ruin your credibility in getting a mortgage again in the future.
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