Mortgage Foreclosure Not Limited To New Loans
During periods of difficult financial times, many homeowners may find themselves facing mortgage foreclosure and the loss of their home. While many foreclosures are being placed on mortgages that are relatively new, there are also many who are facing the loss of their home in which they have lived for 20 years or longer. If they have taken out a second mortgage or a home equity loan, for example, a loss of a job or serious illness could have them facing mortgage foreclosure through no real fault of their own.
Most commonly, mortgage foreclosure generally targets those who were able to secure what is called sub-prime financing, meaning they probably could not qualify for a traditional home loan. Some lenders and investment groups began to use this method of providing home loans to people that could not qualify either due to credit problems or due to limited income, or the homes were selling above their current market value.
With many of these borrows, the loans were offered with interest rates tied to the prime interest rate and when that rate began to increase, so did their monthly payment. When the payment escalated to a point where they were no longer affordable, mortgage foreclosure became inevitable. As the credit crunch became more obvious, the number of homeowners facing mortgage foreclosure also began to increase dramatically.
Finding Ways To Avoid Loss Of Home
There are a few creative ways with which a homeowner can avoid losing their home through mortgage foreclosure action. However, the one thing they need to remember is that while working with the lender may be embarrassing, if they wait too long to work out details to save their house or simply ignore the situation, there is a good chance that mortgage foreclosure will occur.
In some cases, the loss of a home cannot be stopped, especially if the borrower is extended well beyond their financial means. Homeowners should at least try to work with their lender until all available means have been exhausted to stop mortgage foreclosure. Many lenders are willing to work with their long-time customers to help them stay in their homes, but it will take cooperation between the borrower and lender to stave off mortgage foreclosure.
People will have to simply wave off any feelings of embarrassment in order to save their residence from mortgage foreclosure, but lenders will also need to be more understanding when circumstances change and buyer are no longer able to meet their obligation.
