Foreclosure: How To Avoid It

Foreclosure: How To Avoid It

Foreclosure can be a nerve-wracking and stressful situation that could keep you hanging at the edge of your seat.

Just the very idea of going through foreclosure proceedings is enough to cause anxiety for many, if not most people especially since they are facing the prospect of losing their home at any given moment.

But there’s no need to lose your house as long as you know how to deal with foreclosure.

What is foreclosure?

Foreclosure is the process by which a lender legally drives for garnishment proceedings of property that were used as collateral for a loan, in such cases, your mortgaged home.

For example, you take out a loan on a house or property for your purchase. As a security measure, the lender applies for a mortgage on the property to serve as collateral for the loan in case you fail to make payment of the regular amortisations.

Essentially, foreclosure processes and regulations are generally the same but proceedings and guidelines may differ from state to state. For some, it follows the due process starting from a warning notification by the lender on failed payments with a grace period provided for the homeowner to settle payments or be subject to foreclosure proceedings. Other states use trust deeds that can be sold by the trustee to recover failed payments and ownership gets transferred to the purchaser.

Situations that end up in foreclosure

Generally, liquidity or financial problems are common reasons that result in foreclosure proceedings. It is often brought about by unexpected circumstances that affect finances and budget.

Here are some of the most common examples;

  • Getting laid off from work or quitting a job unexpectedly, ultimately losing your regular income which you use to source out your payments.
  • An emergency medical condition that diminishes your earning capacity
  • Transfer of location due to work conditions or requirements
  • A costly medical emergency that depletes your funds
  • A legal separation or divorce where a property is co-owned and divided among principals
  • Poor financial management that leads to excessive debt obligations

These are just a few of the common scenarios that could end up in foreclosure.

Is there a way out of foreclosure?

There are ways you can avoid foreclosure. These are legitimate and legal remedies that can provide you with relief from fear of having your house or property foreclosed.

Reach out to the lending party

If you secured your mortgage from a bank, make sure to contact the institution and ask for options to help you cope with the difficulty you are having in paying your amortizations. 

Do not hesitate to state your case

 If you are in a financial crisis and having difficulty producing the payments for the mortgage, you could offer a compromise agreement. A mutual agreement is often the best solution to a looming foreclosure.

Seek counsel

You can also seek help from real estate experts who can also guide you through a foreclosure notice. There are several reasons and situations that could cause you to go through a foreclosure process and getting the right advice for unique situations can be critical to surviving the crisis.

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