Mortgage rates are still causing some homeowners to have to default on their mortgage payments. The reality of how bad the economy truly is can be seen in the number of people who are losing their homes simply because their income drastically changed and their mortgage payment became too much to handle. Defaulting on a mortgage is the last thing anyone wants to happen and anyone facing a mortgage default should consider all of their options before they throw in the towel.
Defaulting can result from a number of factors from unforeseen expenses arising to losing one’s job. However, in any mortgage there are grace periods around 10 or maybe even 15 days that allow a homeowner time to gather the funds for their mortgage payment so find out how long the grace period is for your mortgage and try to live within those means to begin with.
Don’t make it a habit of paying during the grace period, even though little is thought about it until the period expires and the late fee comes. After 30 days of not paying things get serious because you are in default. This is where many people are headed if not already there.
There are some options at the present time for people who are in trouble. Refinancing is an option so look for low interest rates a financial institution may be advertising or talk with your lender. Obviously this isn’t always an option for some people, but your goal is to get a lower interest rate for your mortgage payment if possible. Mortgage default laws are different in each state and the lender’s dealings with these defaults differ as well so it never hurts to tell your lender your situation and try to work something out before it is too late.
At the present there is also a mortgage modification plan by the Obama administration, which lowers a homeowners mortgage payment to 31% of their monthly income. Many mortgage lenders are on board with this plan so a mortgage modification may be the best bet for a struggling homeowner.
The bottom line is to make mortgage payments on time, every time, no matter what…if you can. If you fall into a problem where your income is gone or a massive cost arises, then get the mortgage payment in within the grace period. If you see that is not a possibility then you have to look at refinance options or a modification on your mortgage.
Talk to your lender when you foresee a problem or see if another financial institution can help. It’s in the best interest of your lender to allow you to keep your home and avoid foreclosure but be careful because there are some mortgage companies out there who are just simply terrible and could care less. Mostly, if you’re honest and talk frankly, they will be willing to help and in turn you can avoid defaulting.
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