Default on a mortgage occurs when someone fails to make their mortgage payment, usually thirty days after the due date. If you do default on a mortgage, the bank will report this to a credit agency which will adversely affect your credit score right away. In a matter of weeks after having contacted you in regards to your late payments, the bank will contact a collection agency in an effort to collect your past due payments. Even if you are able to catch up with full payment including all fees levied, your credit score remains negatively impacted.
Within sixty to ninety days the bank will contact you about the default on a mortgage and warn you of impending foreclosure which will be their very next step. That means losing your home and property to the bank who will be selling it at auction. You will have the opportunity to buy your property back at the foreclosure auction but chances are, if you default on a mortgage, you won’t be coming up with that kind of cash. Most banks will refuse to accept partial payments or give you any more time to get caught up and will post a public notice of the foreclosure.
Default: Avoiding It
If you think you are at risk for default on a mortgage, the best thing to do is to be proactive by contacting your mortgage holder before this occurs. If you think you might have to miss a payment, let your lender know beforehand and you may be given an extended grace period or be permitted to make partial payments with no additional fees to you due to a financial hardship. This is of course only a temporary and short term fix which may buy you some time to get your financial house in order. It will also most probably be allowed one time only, so it’s very important to revamp your budget.
If you’ve missed a mortgage payment or are at risk for default on a mortgage, it’s time to take a look at your income and your outgo. In other words, you are either not bringing in enough income to handle the mortgage and your other expenses or you’re spending more income than you really have available. It’s time to take a good long look at your budget and goals just as you probably did before getting a mortgage in the first place. Be honest about your needs versus wants and find areas to cut back if needed in order to have that mortgage payment available when it’s due. It's important to avoid default on a mortgage at all cost.
From the Superpages.com
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