Can You Prevent Home Foreclosure with a Mortgage Loan?
For many young couples, the desire to start a family is often accompanied by the dream of owning a home. Though not for all, this dream often comes true. However, for some families, down the road, this dream turns into a nightmare.
Due to the amount of money required to buy a home, most young families rely on mortgage loans to finance the purchase. To access such funds, the house is used as collateral for the loan. Repayment durations mortgage loans often last well over a decade. At times, during the course of the repayment period, an emergency or loss of income can affect a borrower’s ability to honour their obligations.
If the borrower is unable to repay for an extended period, the lender will be forced to foreclose the property. This means that the lender repossesses the house, evicts you, and sells it to recover you are unable to repay. Unfortunately, foreclosure is a reality that many Canadians face, and the rates of foreclosure in recent years have been rising.
The risk of foreclosure is scary and can also be paralyzing to some extent. However, by taking a mortgage loan for foreclosure, you can preserve your homeownership status.
Common Reasons for Foreclosure
Other than the rare individuals who willfully opt not to honour their obligations, foreclosure often comes after an event that significantly affects a family’s finances, such as:
- Loss of job
- Death of one of the breadwinners
- Family problems such as divorce
- Over accumulation of debts
- Illness or injury
- Unexpected major home expenses
What Impact Does Foreclosure Have?
Despite the overwhelming feelings that come with the risk of foreclosure, it is vital to act fast and assess options such as taking a mortgage loan for foreclosure. Inaction or any delays increase the chances of losing your home and making your investment and sacrifices worthless. Foreclosure is also damaging to your credit score and can limit your access to credit in the future.
How to Deal With Foreclosure
1. Communicate With Your Lender
When foreclosure is looming, it’s always best to take a proactive approach. First things first, you have to know that foreclosure is also not in your lender’s best interest, nor is it a cause of action they love pursuing. On their part, the process is long, and attorney fees make it expensive. Lenders are more open to missing a couple of payments or adjusting loan terms than proceed with foreclosure.
Therefore, the first step in slowing down or completely avoiding foreclosure is communicating with your lender. By law, lenders are allowed to begin the process of foreclosure once you have missed one payment. Reach out to them once you realize you will be unable to make a payment.
If you foresee an inability to make mortgage payments for an extended period, let your mortgage lender know immediately. Ask for extra time to make the payments or a readjustment of the loan terms.
2. Take a Mortgage Loan for Foreclosure
If you are already in arrears, your mortgage lender may not be too keen to adjust terms for you and may proceed with foreclosure. However, this does not mean your house is gone. Though banks do not generally give loans to bail people out, there are institutions where you can access a mortgage loan for foreclosure.
By taking such a loan, you’ll be able to get back on track with your mortgage payments and retain ownership of your home.
Is a Mortgage Loan for Foreclosure Worth It?
Beyond being an investment, your home holds a lot of sentimental value as it’s where the best of family memories are made. Are you facing foreclosure? Step up and take a mortgage loan for foreclosure to protect your family from the trauma of eviction.