The Mortgage Foreclosure Process - Be Prepared

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The mortgage foreclosure process can be frightening if you are armed with knowledge; it is absolutely terrifying if you are uninformed throughout the process. Here are some things you should know about the mortgage foreclosure process.

1) First of all, the bank does not start the foreclosure process until you have become 3 months behind or more on your payments. Of course the goal is to never get behind at all, but we all know that stuff sometimes happens and some things are beyond our control. When you miss the due date on your mortgage you do not have to worry that the bank is going to come in and change the locks on your home. Yes, your credit rating will suffer but you are still in good shape.Once you realize that you will be late - even just one payment, be proactive and start working with the bank. Don't let yourself get into the situation where you are avoiding the bank's phone calls. In fact, the bank wont even start calling until after your second payment is missed. Keep in mind that the bank does not want your home. It is a liability to have homes on their books. They are not in the real estate business but the mortgage loan business.

2) Once you are three months behind you will either go into what is called judicial foreclosure or non-judicial foreclosure. In a judicial foreclosure, a lawsuit is issued to the homeowner who can elect whether or not to respond. If the owner doesn't respond the home is auctioned off to the highest bidder. If the highest bid doesn't exceed the total amount owed, the home stays the property of the bank. In a non-judicial foreclosure, the lending institution would issue a statement of default and notify the owner of its intent to sell the home. The owner has the chance to arrange an agreement and payment plan that is acceptable to the financial institution. If an agreement cannot be reached, the homeowner has the option of filing a chapter 13 bankruptcy in order to stop the foreclosure. Even if bankruptcy is filed and the court payments are not made, the house can still go into foreclosure. If an agreement is not made or the bankruptcy is dismissed, the property will then be sold at auction.

3) There is a chance for the homeowner to still be liable for part of the mortgage. If the sale of the home doesn't result in the amount of money that is at least equal to the amount owed on the home, the original homeowner is responsible for the difference. During the mortgage foreclosure process legal and bank fees can accumulate which the homeowner is responsible for. All of that goes into the final cost of the home and must be cleared up. Failure to pay the total amount due can be just as detrimental to your credit as the foreclosure itself.

The process of foreclosure is not fun; it is not meant to be. Don't overextend yourself credit wise. Buy a house you know you can afford and live below your means.

Article Source: http://depositarticles.com/

Keep in mind that the bank does not want your home. But they will take it if they have to. Know the mortgage foreclosure process so you wont get surprised. Get all the information you need to keep your house.

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