What can happen if you don’t make your mortgage payments?

When your financial circumstances change and you find yourself in a difficult situation, you may face the possibility of defaulting on your mortgage. What can you expect if this happens?

When you have defaulted on your first payment, your lender will most likely send you a letter regarding the late payment and this usually incurs a late payment fee and a processing fee. At this stage, it is important to contact your mortgage lender to explain your situation and find an alternative option. However, if you do not contact your lender and allow the mortgage payment to be delayed for more than 90 days, the lender will initiate a foreclosure proceeding to repossess your home. This means that your home is in the recovery stage and you are no longer entitled to it. In an attempt to save your property, first talk to your mortgage lender to see what options are available and even consider hiring a good lawyer for your loan contract renegotiations. A good attorney with experience in recovery cases will know the ins and outs of these types of cases and help you determine which is your best option. In most cases, your lender will be happy to try to renegotiate the situation until you recover. Do this before it’s too late and you end up incurring additional charges.

Aside from the risk of losing your home, a major consequence of defaulting on your home loan, as with any other loan agreement, is the negative effect on your credit history. It takes years to build good credit, and defaulting on your mortgage, particularly to the point of foreclosure, can cause you a lot of trouble for future financing. This includes not only future mortgage applications, but also car financing, credit cards, store credit, and any and all credit applications. A bad credit rating can ruin your credit rating for many years.

The best way to keep things from getting out of hand is to avoid default, and foreclosure in particular, at all costs. One way to do this is not to take out a mortgage beyond your means. As a guide, when buying a property, make sure it requires no more than 40 percent of your monthly income. It’s also a good idea to have at least three months’ mortgage savings stored as backup, in case of difficulties. Consider purchasing an accident and injury or loss of income insurance plan that will cover you in the event of serious situations.

Remember to talk to your lender if your repayments are becoming too difficult for you. Consider looking for a refinance mortgage rate and look for the best home loans available. This may mean switching companies, so look for the best mortgage refinance company available. There are many companies that can take over your loan and offer you a lower monthly payment rate. However, remember to check it carefully and don’t let despair cloud your judgment or allow you to make hasty decisions.