The COVID-19 pandemic has drastically affected many people's ability to keep up with their bills. If you fall too far behind, your lender may place your home into foreclosure allowing them to reclaim ownership of the home. If your home value is worth less than what you owe, there could be a deficiency judgment that occurs. This means you lose your home and you would owe money to your lender.
Whether you or your spouse lost a job during the pandemic, your family had a medical emergency or you purchased a home that you can't afford as easily as you thought given your current circumstances, there are proactive steps you can take to prevent loosing your home.
Don’t Avoid What’s Going On
If you fall behind on your loan, don't avoid it. If you’re getting notices from your bank, make sure you’re reading everything that they send you. Talk to other creditors you have and ask for flexibility and relief.
Work With the Bank
There isn’t a single lender in the U.S. that takes pride in taking your home from you. If they’re left with no choice, foreclosure will come into play. Most banks will provide options to help you to keep up with payments if you’re having trouble. Lenders have been known to allow homeowners to take a break from their mortgage payments during the pandemic if they are out of work or have extenuating circumstances.
Know Your Rights When it Comes to Foreclosure
There is likely information in your loan documents that will provide you with information regarding missed payments. You can also contact your State’s Government Housing Office to learn more about the foreclosure laws in your area. There is often free counseling through governmental resources for people who are at risk of losing their home to foreclosure. They can help analyze your situation and offer recommendations.
Take a Hard Look at Your Spending
Your home should be on the top of your list when it comes to your monthly spending. Aside from purchasing health coverage, it’s critical that you find a way to keep up with mortgage payments. Luxuries such as dinners out or to-go, cable TV, gym memberships and cups of coffee at the local coffee shop can easily be eliminated. You may also consider selling assets such as motorcycles, bikes and an extra car. Look to take on additional work as well for the time being.
Be careful with for profit companies that will solicit you to aid you in avoiding foreclosure. They will often claim to communicate directly to your lender on your behalf. Some of these businesses are legitimate, but it’s a better idea to use this money towards your mortgage payments. There are resources out their to help you; both the government and your lender. Take time to use them to clearly develop a strategy on how you can protect your home value and your property.