In case you default in making payments, there are chances that you may lose your home. Losing your home because of default can indeed be a very painful and terrible experience. You may have defaulted because you or a family member has lost the job. Anyways, whatever be the reasons, losing your home is not at all desirable. The Federal Trade Commission (FTC), the consumer protection agency in the country, also wants you to save your house at any cost. This federal body wants you to have good knowledge about the mortgage products and to make a well informed purchase.
Make a well informed purchase
You should have adequate information on the mortgage loan that you have taken out. You should have proper knowledge about all the costs associated with a mortgage. You should know whether the monthly payments that you are currently making are going to increase in the future and the reasons behind it. If you have any doubts on the mortgage loan that you have taken out, you should get those clarified. Check out whether the mortgage that you have taken out falls within one of these categories.
- Fixed rate mortgage
As the name suggests, the rate on this mortgage remains fixed throughout the entire term of the loan. Here, you have the certainty of making fixed payments over the entire loan term.
- Adjustable rate mortgage
In this type of mortgage, for an initial stipulated period of time, the rate remains fixed. Once that initial period is over, the rate begins to vary according to some benchmark.
- Hybrid adjustable rate mortgage
This combines the features of both fixed and adjustable rate mortgages. Here, the mortgage has fixed payments for a few years, and thereafter it turns into an adjustable rate mortgage.
If you have any confusion on the type of your mortgage and its implications, then fell free to contact your lender and get all your doubts clarified.
If you have defaulted in making payments
If you are finding it difficult to make timely payments and have already defaulted, then it's high-time for you to contact your lender as soon as possible. You need to ensure that your delinquency does not lead you to foreclosure. Here are brief idea on some mortgage programs which can be used to avert foreclosure.
- Forbearance
In case of forbearance, you get temporarily relief from the lender so that you can ameliorate your situation in the meanwhile. Here your payments are temporarily reduced or suspended by the lender so that you can improve your financial situation in the meanwhile.
- Mortgage modification
Here, the terms and the conditions of your mortgage loan are changed so as to make it more affordable for you. The rate may be lowered or the term of the loan may be increased so as to make it affordable for you.
- Bankruptcy
This the last resort available before you to avert foreclosure. Here, either your debt obligations are eliminated or you may be offered an alternative repayment plan. Anyways, bankruptcy has very serious negative consequences.