Many homeowners are finding that they are in a position where defaulting on their mortgage and foreclosure are unavoidable after certain avenues of foreclosure prevention have been explored or cases where factors like unemployment are simply weighing too heavily on these men and women for any of these foreclosure prevention programs to be helpful or, in some cases, available in their area. Yet, there are conflicting reports as to homeowners who are defaulting on their home loan and just how easily it may be for a homeowner to get a mortgage after they have lost their home.
There are some indications here in the early part of June that some banks may consider homeowners who have defaulted on their mortgage to be a safe financial risk if they have kept their finances current in other areas. Simply put, some homeowners may have been able to keep their payments on credit cards, car loans, or student loans current, but could not afford their monthly mortgage payment, defaulted, and lost their home as a result. In cases like this, some lenders are of the mind that homeowners who may have defaulted as a result of unusual financial circumstances, unemployment that was no fault of their own, or other factors like negative equity may be a safe bet if they kept other financial obligations intact amid these problems.
While homeowners need to understand that this faster option to get a new home is not the open for strategic defaulters, there may also be some drawbacks that homeowners are facing if they attempt to reenter the housing market after they have defaulted on a previous mortgage. Many banks are requiring that homeowners meet higher interest rates or down payments simply as a way to dissuade those who may not be able to afford a mortgage from attempting to purchase a home at the present time, but this still is raising questions as to whether banks should even lend to homeowners who have defaulted at the present time.
Again, it’s unlikely that a homeowner who has walked away from their mortgage will find much sympathy from certain lenders, as these homeowners were in a position where they could meet their monthly mortgage payment but chose not to do so thanks to factors like negative equity causing the value of their home to drop below what they owed on their mortgage. Yet, many feel that if homeowners who are in a credit position that may not be optimal are getting home loans once again, we could be repeating some of the same problems that caused the housing bubble initially.
Contrary to these arguments, there are those who say that homeowners in some cases did indeed simply find themselves in a situation that was out of their control and they could not afford their mortgage payment, but again, were able to keep other areas of their financial life afloat, and the chances that a wide number of these homeowners will reenter the housing market and subsequently find themselves in a position of imminent default would be unlikely. The good news, though, is for homeowners who did indeed simply hit a rough patch in their financial life which led to the loss of their home, since if a lender views them to be a safe credit risk as a result of avoiding defaults in other areas, reentry into the housing market could be more easily accomplished sooner rather than later.