Better Ways To Avoid Foreclosure

: Chris Lee Law Firm

  Filed under: Refinancing

It is rare for someone to end up in foreclosure strictly because they got in over their heads in a mortgage, but it does happen. More likely, you bought a house you could afford at the time and your financial situation has changed due to employment or other unforeseeable circumstances. Regardless of how you came into mortgage debt, there are a few ways to avoid foreclosure now or in the future.

Right Now

If you are already in a home and suspect you may be at risk of missing a mortgage payment, there is still time to take action against foreclosure. First, consider your options. Can you afford to refinance your mortgage? Refinancing into a lower interest rate can lower you payments, lowering your risk of default. However, there are some out of pocket costs associated with refinancing that should be considered. What about a mortgage modification? If your credit is moderate to excellent, you may be able to modify your existing loan and reduce your payments. Talk with your lender right away to discuss your options.

In The Future

The trick to avoiding problems with mortgage debt is to buy within reason; and now just now, but in the future as well. Just because you can afford your monthly payment, doesn’t mean you can sustain this payment if your income level or amount of expenses were to change down the road. A good rule of thumb is to ensure that your mortgage payment is not higher than 25% of your total monthly income each month. Buy a home with a price that fits this budget. If you do decide to purchase a home outside of your comfort zone, be sure you have at least 3 to 6 months worth of mortgage payments saved in an account to sustain your mortgage in the event of financial hardship.

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