Many people are unable to meet monthly home loan repayments because of the increased cost of living and personal debt. The prospect for home owners of losing their house is terrifying, yet this does not have to happen. The key in preventing foreclosure is to take action immediately.
Different Ways to Avoid Mortgage Foreclosure
- Undergo a voluntary debt review with the lender's counselors. They will help a home owner to draw up a budget and trim expenses in order to meet monthly home loan repayments.
- Arrange to pay of mortgage payment arrears over a certain period of time. The arrear repayments are then added to the normal monthly repayments.
- Restructure the home loan over a longer period of time. Home loans are usually scheduled over a term of 20 years, but banks will be willing to restructure the loan period for up to 30 years if it means preventing foreclosure. Remember though, that although this will reduce monthly repayments, the interest over the term of the loan will be much greater. Once finances improve, pay as much extra into the loan as possible to prevent this from happening.
- Reduce payments for an agreed period of time. Payments may even be suspended for a period of time in certain cases. After an agreed period, payments will have to be resumed as per the original loan agreement.
- Surrendering collateral, such as a life insurance policy with an investment component, to the bank. If a home owner is unable to meet monthly loan repayments, the bank will cash in the policy and use the proceeds to cover the repayments.
- Consider finding a second job or weekend job. This may be tough but it is better than losing a home. Ask the whole family to pull together and put whatever extra cash is available towards the mortgage payments.
The home owner should keep up regular communication with the lender, especially if unable to keep up with his or her end of the arrangement since lenders want to see that home owners are responsible.
Consulting a Home Loan Specialist
An independent home loan specialist is qualified to refinance an existing home mortgage from its original terms in order to prevent a home being repossessed. They will be able to shop around on behalf of the home owner for the best deal and are usually experts in negotiating with lenders to get better rates and terms.
A loan specialist will also be aware of laws that have been put in place concerning home foreclosure. Be aware that they will charge for their services and be careful to find a reputable specialist who will not attempt to take advantage of a home owner who is desperate to save their home at all costs.
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Fleur Hupston - Fleur Hupston is a professional freelance writer based in Botswana, Southern Africa. From this unique perspective, she writes travel ...
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