Losing your home to foreclosure can be a devastating prospect. In some cases, there may be signs indicating a foreclosure is on the horizon and recognizing these signs will help develop a plan and potentially prevent the process from occurring. The U.S. Department of Housing and Urban Development offers the following tips, so you can identify signs of trouble before this situation becomes much worse.
Your spending habits are a prime indicator of future troubles. For instance, using credit to purchase everyday items like groceries usually signals a serious issue. Also, failure to pay recurring bills, such as utility payments, is another common sign of money problems. Even if you’re financially sound right now, the onset of a serious medical condition or the loss of employment can also play a role in future financial stability.
It also helps to understand what occurs when you start missing mortgage payments. Lenders will contact the mortgage holder after the first and second missed payments. Upon the third missed payment, lenders will issue a letter and offer 30 days for you to get current. It’s up to you to provide the amount requested in order to prevent the foreclosure process. Once 30 days has passed, the lender’s legal department will take up the issue and foreclosure will be pursued.
While you may think all hope is lost from the first missed payment, this is not always the case. Many lenders are willing to work with the homeowner, either by lowering monthly payments for a short period of time or finding another option. You must respond to your lender when contacted. Avoiding calls and letters will only make the situation worse.
