Early Warning Signs of Foreclosure
No one wants to go through a foreclosure on their home. It is an unpleasant process. It kills your credit and will make it much harder for you to buy a home—or get any kind of major loan—in the future. And of course, you lose your house and any appreciation in value it may have gained since you purchased it.
Nothing good ever comes out of a home foreclosure, not even for the bank. They stand to lose money, as well. They won’t get the owed payments on the mortgage loan and they’ll end up reselling the house for less than it is worth. This point is important to understand because the bank wants to avoid a foreclosure almost as much as you do. They may be willing to work with you to find a solution and they will stretch out the process as long as they can before they have no choice but to foreclose.
This gives you options in the meantime. You might be able to sell your house before it is foreclosed upon. This can get you out of a bad financial situation before it gets even worse. This is where PropertyLark comes in to offer you fast, easy and safe home selling options and potentially avoid foreclosure.
So, what are the early warning signs that a foreclosure on your home may be imminent? Here are some financial issues you should watch out for as a homeowner:
Too Much Debt
Consumer credit is easy to get (especially when you are a homeowner with a lot of collateral). It’s very easy to let credit card debt, car loans and other debts get out of hand. These high-interest debts build up and will eventually overwhelm you. If you don’t start getting your finances in order, you may be headed toward foreclosure and other major financial struggles.
Can’t Afford to Pay Bills
If you are having trouble paying all your regular monthly bills (utilities, mortgage payments, car payments, etc.) on time—or at all—it will come back to haunt you. Make sure your basic living necessities are covered first and put a priority on your mortgage payments and property tax bills. Otherwise, you risk losing your house to foreclosure or tax default. Unfortunately, people lose jobs, get pay cuts, have deaths in the family, get divorces and experience financial hardships. You may be better off selling your home while you can before the debts and back payments overtake your life.
Adding More Debt Just to Pay Bills
Another bad sign is if you are using your credit cards or borrowing money from friends and family just to pay your bills. This means you are living beyond what you can afford. Your mortgage payment is likely your most expensive bill every month. When your home becomes more of a burden than a source of pride, it may be time to sell and get out from under it.
You might be living on a tight budget and just barely making your monthly payments. What happens when there is an unexpected expense such as a major repair? Living on the financial razor’s edge is always stressful, and you have to be careful that something bad could happen and throw your tight budget into a tailspin.
Adjustable-Rate Mortgage Concerns
Many homeowners have adjustable-rate mortgages. They may have started with a very low interest rate that they could comfortably afford, but the real estate and mortgage markets have other plans. Rates can go up unexpectedly and vastly increase your monthly mortgage payments. If you have an ARM loan, you have to be ready for these kinds of rate changes. You may want to look into refinancing with a fixed-rate mortgage loan if you can.
As you can see, there are any number of financial issues someone can be facing and it will eventually make it harder and harder to afford living in your home. It’s good to recognize the early warning signs of foreclosure and do what you can to prevent it long before it becomes a possibility. Talk with your bank. Get financial help. Consider selling your house before it’s too late. Get what you can out of it now and move on. Don’t risk losing it altogether.
If you are in a state of financial distress and would like to discuss your home selling options, reach out to PropertyLark. We can make you a fair cash offer for your house or help you find another home selling or financing solution based on your specific financial situation. Just fill out the contact form on any page of our website to get started.