Chances are you’ve seen some of the fallout of the roughest economy in decades: family homes lost to foreclosure. From city streets to sprawling suburbs, many communities have seen a rise in the number of homes whose owners could no longer afford the mortgage payments.
If you’ve suffered a financial setback and fear that you’ll fall behind on your mortgage, take action early. Contact your lender and let them know about your challenges. The earlier they know, the more options you’ll have to make adjustments that may keep you in your home.
When you reach out to your bank or mortgage lender, you should be prepared to discuss and document your income and expenses. Depending on your financial situation, they may be able to offer options, such as modifying the size and timing of your mortgage payments. In some cases, the lender may be able to modify terms of the mortgage. For example, they could offer a longer total time period for repayment, so that monthly payments are smaller and more manageable. The options available depend on each individual’s situation.
Some people may be hesitant to admit that they are having financial challenges, but the reality is that anyone can face the prospect of foreclosure – no matter what their socio-economic level. The loss of a job changes a family’s budget overnight.
What may surprise some people is that banks and lenders don’t want to foreclose; actually, it’s an option of last resort. Why? First and foremost, no one likes the idea of forcing a family from their home. Second, community banks work to build relationships with their customers and want to do business with them in the future. Third, it makes business sense to work with a customer to keep them in their home. Foreclosing on a house is an expensive process, and if the bank ends up owning the property, it has to pay the maintenance and upkeep costs.
The key is to contact your lender early if you know you will have trouble meeting your mortgage payments. They will have a much better ability to help if you call when you’re 30 days past due on the mortgage than if you wait six months.
There are also places to get more information to help you avoid foreclosure. Susquehanna Bank’s online Video Resource Library includes a short video about Avoiding Foreclosure. You could also contact a credit counseling service, such as one recommended by the National Foundation for Credit Counseling for a free consultation. It’s also important to know how to avoid loan modification scams.
Ideally, you and your mortgage lender want the same thing: for you to stay in a home that you can afford.