Some people say that if you are still paying a mortgage, your home shouldn’t be your biggest asset. The remaining debt puts you into a position that is unstable, as many people find out after missing a few mortgage payments.
Lower the Chances of Foreclosure By Getting a Cheaper Home from the Beginning
If you have not yet bought a house, make sure that when you do, you try to shop for a mortgage that is 20% less than what you can afford. Look at your budget and decide. This is because mortgage companies have the tendency to raise rates and when they do, that raises your monthly payment.
If you were already struggling to make the previous payment, it’s going to be hard to make an increased payment. Houses are very expensive, so it’s not always possible to do this but if you have a choice, spend below what you can afford.
What to Do if Your Mortgage Company is Applying Pressure
Many mortgage companies are quick to foreclose on accounts that are even a month behind. If you already have a home and cannot afford the mortgage payments for a period but you don’t want to lose your home, what can you do?
Get a Short Term Loan to Cover the Outstanding Mortgage
If your credit is good otherwise, you may consider getting a short term loan from a financial institution to cover the outstanding balance.
You can get these from:
- A reputable bank
- A peer-to-peer lending service
- If you are a member of a credit union, this may be the best place for you to get a loan.
- Some companies also offer their employees loans at reasonable interest rates.
These are only short term solutions though and if you notice that your situation is spiraling out of hand, you may need to talk to your bank about loan modification, or seek advice from a non-profit debt counseling agency or another person who will offer genuine advice and not just take your money.
The faster you do this, the better. Time is not on your side when it comes to situations like this but a decision made too hastily won’t profit you either.