Losing your home could be a very trying thing in your life. When a foreclosure claims your home, not only do you lose your financial investment, you lose the very dream of homeownership. The lives of the loved ones in your family aredisrupted, as they have to leave the familiar surroundings, school and friends. Apart from having to build up your damaged credit rating, you are faced with the challenge of getting your life back together.
Foreclosure Is Akin To Bankruptcy
Both bankruptcy and foreclosure are regarded as a personal failure. Even people, who have no control over the circumstances that thrust them into this situation, seem to think so. Therefore, many guilty borrowers delay when dealing with mortgage payments they have missed; they are uncomfortable to face their lenders.
In reality, an early contact with the lender would be the best move that could be made. If you have defaulted on your mortgage agreement, your lender, according to his legal rights, can reclaim your house through a foreclosure. As per the foreclosure process, your house could be resold or auctioned off for recovering the debt. However, your lender may not be ready to be involved in the expenditures associated with a foreclosure. He may prefer to work out an agreement with you, which will enable you to stay in your house and repair your finances.
Forbearance Is a Tool to Keep You in Your Home
To help you keep your house, your lender has a host of tools. Forbearance is one such tool lenders use very often. Forbearance is an agreement between you and your lender, wherein, the right to foreclose on your home is suspended and you are given time to pull up your finances. Forbearance does not mean that your lender has forgiven you the debt; it means you have some more time to avoid a foreclosure by getting your finances in order.
During the agreement period, your mortgage payments may be suspended or reduced. After the agreed term, you will have to resume payment at a rate, which will bring your loan current. If it is a job layoff, or a similar situation that has caused you to default, your lender may be more willing to reach out and work with you.
Show You Can Start Making Payments
Lenders and mortgage companies have their own requirements when granting forbearance. You will need to show your financial troubles will be solved by the time forbearance ends and you will start making regular payments. You may not be making the payments temporarily, but eventually, you will need to bring your mortgage current. It is possible that the lender will charge interest on the forbearance period when you make lower or nil payments.