We all go through financial difficulties several times during our lives. Unexpected events like health problems or the loss of a job can disrupt our lives in many ways including financially. As a homeowner, one of the first issues is the ability to keep our mortgage payments unaffected. However, when the financial struggle at home goes for a more extended period, it is crucial for the homeowner to reassess the situation and make the best decision as early as possible. The foreclosure process will still take some time but not for long; therefore, learning the process and acting soon on some options can avoid many headaches, anxiety, and stress.

Defaulting on Home Mortgage

The consequences of defaulting on the mortgage payments can last for years. Anytime that a home mortgage payment goes past due 30 days, it can affect the homeowner's credit rating. After the 30th day without pay, a notice of late payment is sent by the lender. If a home mortgage goes without payment for 60 days, then a second notice is sent. Finally, if at the mark of 90 days, no payment has been made towards the home mortgage then the process of foreclosure on the house is initiated by the lender. Within the period of those 90 days, the lender or a collection agency will try to contact the homeowner. Also, a notice of default happens between 30-45 days past due (Loan.com, n.d.).

When Foreclosure Happens

The process of foreclosure can occur from a few months into years. Foreclosure is filed with the court after 90 days of delinquency on the loan payment. The lender is required by law to advise the homeowner in written that the process of foreclosure has been initiated (Notice of Foreclosure). Typically, foreclosure happens around 120 days of no payments; however, it depends on each lender. Nevertheless, all lenders must give homeowners a period to remove their belongings before the property is put for a public sale (995Hope, n.d.).

How Foreclosure Affects Families

Foreclosure can affect families in many ways.  Besides the obvious financial consequences, a foreclosure can cause many difficulties, for example, it can bring to a person the difficulty to buy or rent another place. Some people will end up living with their families for a while. The foreclosure process can profoundly affect families and even communities by displacing stability and aggravating further the financial insecurity. There is also a significant amount of personal and family distress that could affect family relationships an even the health of many individuals (Kingsley, T., 2009).

How to Avoid Losing a Home

A house foreclosure is not an easy process to the homeowner; however, with early planning and action, there are many steps that homeowners can take to either keep their homes or sell it if that is what they wish. The most significant problem is that homeowners try to ignore the imminent situation until it is too late. The Department of Urban and Housing Development website explains some steps homeowners can take to avoid the foreclosure process:

• Don't ignore the problem - First and foremost, the issue should not be ignored. When a homeowner sees that there is a possibility in defaulting on the house payment, he or she should contact the bank.
• Work with the bank - In this situation, the bank is the least interested in homeowners losing their homes. Banks have entire departments dedicated to help and show homeowners the right direction to go.
• Rent out the home - When the financial situation is potentially a long-term situation, renting the property may be a great solution to keep the property and have a chance to go back living in it once the situation gets better.
• Modify or refinance the home loan - Depending on the situation; homeowners can qualify for a loan modification or refinancing. There are a few programs available from the government ( hud.gov ) to help owners avoid foreclosure.
• Borrow money - Sometimes family and friends will step in to help with the situation. Talking and explaining the problem can improve the situation, and if this is the case, the homeowner should accept the help being offered to him or her.
• Sell the house - Selling the property is another way to avoid foreclosure and move on to different plans in life. There will be other chances to buy a house. The key is to act on the sale as soon as possible because the sale process can take a while.
• Bankruptcy - Some types of bankruptcy will stop the foreclosure process right away but only temporarily. Sitting down with a lawyer for consultation can clarify and help in the decision.
• Avoid scams - Once a home payment defaults, many "less than genuine" businesses will try to contact owners trying to offer miracle solutions for a fee. It is essential that the homeowner stay focus and work only with legitimate companies.

Foreclosure is a complicated process that can be avoided with the right counseling and knowledge. Losing a house should be the last option homeowners should take. If refinancing is your option or if you need some further information on what to do, we are here to help you.

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References

Home Loan. (n.d.). What Happens When You Default on a Mortgage Loan? Loan.Com.

Homeownership Preservation Foundation. (n.d.). So, what exactly does it mean to be facing foreclosure? 995Hope.

Topic Areas. (n.d.). Avoiding Foreclosure. Department of Urban and Housing Development.

Kingsley, T. (2009). THE IMPACTS OF FORECLOSURES ON FAMILIES AND COMMUNITIES. The Urban Institute.