The last thing you expect after purchasing a home is that you will be facing foreclosure. However, many things in life can put you in that position, making it impossible for you to keep up with your monthly mortgage payments and eventually default on your loan. At this point, your lender may take action to seize the property and put it up for auction with the aim of recouping its losses. If you find yourself in this situation, it is urgent that you contact an experienced foreclosure attorney to understand the legal implications and the options that are available to you at this point. After all, the mortgage agreement is a legally binding contract and it may not only leave you without a home but also impact your credit and your ability to secure other financing in the future.
Main Reasons Homeowners Go into Foreclosure
If you are facing foreclosure, you should know that nowadays this is a greater threat to American homeowners than it has ever been in the past. Yet, there are several actions that you as a homeowner can take to avoid the ultimate financial devastation that foreclosures represent. If you are in a dangerous situation that may have you risking your home, reach out to your foreclosure attorney as soon as you can to take proactive actions to avoid it.
Here is a list of the most common reasons homeowners cite for going into foreclosure.
#1 Job Loss
Even the most disciplined homeowners may be unable to continue making timely mortgage payments after being laid off or otherwise losing their main source of income. Just those who have been able to set aside a considerable sum of money can afford to stay current on their mortgage payments at such a stressful time. Talk to your lender about your situation. They may offer you a way to stop making payments until you find a job and then catch up on the money you owe them. You may also qualify for a loan modification if you have enough equity in the home.
#2 Severe Damage
If your home has been impacted by a hurricane, a flood, a fire, or another event that has caused major damage and you either have no insurance or your policy is not hefty enough to pay for the damage to be repaired, you may be unable to afford the repairs out of your own pocket. In this situation, study the possibility of selling your house to an investor even at a loss and avoid the consequences of foreclosure.
#3 Increase in Home Expenses
No matter how careful you are with money and how much planning and budgeting you put in place, after a while you may find that you can no longer afford the home due to increases in your property taxes, in the monthly payments to your homeowner’s association, or in your homeowner’s insurance. When these mandatory expenses get out of hand, you risk going into foreclosure. Look into homestead exemptions if you have not already done so, since this may give you a bit of a breathing room and may help you avoid foreclosure.
#4 Medical Bills
If you or someone in your family is suddenly struck with an injury or illness that requires lengthy and complicated medical treatments, the medical expenses can eat up your income and savings very quickly. Also, if the person who is now ill is the main breadwinner in the home, the situation can become even more dire impacting your ability to keep up with your monthly mortgage payments.
#5 Divorce
When there are two sources of income that can cover the expenses of a home and then suddenly there is only one, the possibility of meeting all the monthly expenses becomes much more complicated. Even if you are the spouse who remains in the home, the amount of spousal support you may receive may not be enough to fill the gap since your ex-spouse now needs to be able to afford a separate place to live.
#6 Death
The death of one of the homeowners will mean the loss of one source of income and less money to go towards the monthly mortgage payments. Perhaps the spouse who passed away was the only one who held a job and now there is no money coming in to handle the home’s expenses. Even though the law may allow the surviving spouse to assume the mortgage in their name, the money may just not be there to make the payments. While overwhelmed with grief at the loss of a partner, the remaining homeowner may not act quickly enough to protect their property and may end up facing foreclosure at the worst possible time.
Talk to your attorney about the possibility of filing for bankruptcy so that you may become eligible to keep your home even while restructuring your debt.
