What is Foreclosure?
If you fall behind in your mortgage payments, your lender has the right to foreclose on your home. This usually begins with the lender sending you an “acceleration” letter to your home requiring full payment of the late loan payments. The letter will set a deadline for full payment of the past due amount. If the amount is not paid, foreclosure proceedings begin.
If required payments are not made, the lender sends your file to an attorney to start legal action, which usually includes forced sale of your home. The attorney’s fees are included in the amount due. If the resale value of your home is lower than the amount owed, you can end up owing the difference – also known as a deficiency judgment.
Once the court-ordered foreclosure sale takes place, you lose your home and its equity. An unfavorable rating will appear on your credit report for seven years. A bad credit history can make it difficult to rent an apartment, borrow money, or in some instances get a job.
If you think you may have a problem making your house payment, or you are late already, be proactive. Call your lender immediately to discuss what you can do. Don’t ignore letters from your lender. Early intervention is important. Be honest about your circumstances. It’s possible you can make alternative arrangements and save your house.
Don’t move out or abandon the property. There are programs that can help you pay your mortgage and keep your home, but you may not qualify if you abandon your home.
