How to Avoid Mortgage Default
Not only does paying late and defaulting on your mortgage loan lower your credit score, but it also makes it more difficult for you to refinance or obtain another loan in the future. Even worse, the lender could repossess your home and sell it. While unexpected events happen such as job loss or illness, defaulting on a loan is a serious situation that bears many long-term consequences.
To avoid added late fees and collection costs to your loan, losing your tax refund, or being sued for the balance of your loan, take the following steps:
Never borrow more than you need – minimize loan debt by carefully reviewing your budget and only borrowing what you need to buy the home – even if you can get approved for more.
Be aware of your rights and responsibilities – before signing a mortgage agreement, be sure you have a clear understanding of the terms. Do not hesitate to ask your lender to answer any questions you may have. Getting clarification from a professional at the start of the loan process will help you to avoid potential issues later down the road.
Stay in contact with your lender – let your lender know about your situation as soon as possible. How you choose to deal with your loan problems could really help or hurt you. Most lenders prefer to work with you over taking back the home, but you must contact them to discuss available options.
Keep your account current – once you a set up a plan with your lender to get back on track, it is crucial to maintain a good repayment history. Do not agree to something that is unrealistic or that you may not be able to do.
If you fall behind on your mortgage loan, make it a priority to catch up as quickly as possible. The faster you recoup, the easier it will be to prevent bankruptcy and foreclosure, giving you and your family peace of mind.
We Can Help
At Butler Mortgage, we understand that each of our customers has different financial backgrounds. If you want to buy a home but think you may not qualify because of issues you have had in the past, contact us first. Many people are surprised to learn they still have a chance at owning their dream home. For more information or to get prequalified, please call us today at 407-931-3800.