Failing to make your mortgage payments may warrant foreclosure. If the lender or bank repossesses your home, you will be forced to move out and you can end up homeless. While VA home loans in Utah, for example, can help you get out of this situation, it’s still better to be proactive and do the following to avoid foreclosure:
1. Build an emergency fund
Building an emergency fund is a proactive move to avoid foreclosure and other financial emergencies. Sometimes, you may face unexpected situations such as loss of a job, medical emergencies, death in the family, divorce or separation, or ballooning of debt that may leave you unable to pay for your mortgage. When this happens, you may end up with a foreclosure on your home or burying yourself deeper in debt to keep the house.
To avoid this, build an emergency fund that is worth at least three months of your living expenses. Don’t touch this account for anything other than an emergency, so that you always have a backup plan in case things go south.
2. Contact your lender
When you start having problems with your mortgage payments, contact your lender as soon as possible. Explain the problem as honestly as you can. Most lenders will offer their clients assistance programs or other options to help during financial difficulties.
3. Don’t ignore the problem
Ignoring the problem will only make it worse for you and your family in the long run. Once you receive your first notice in the mail, don’t ignore it. It may be hard on you, but opening the letter and reading it can help you find ways to fix the problem. If you ignore notices from your lender, you may end up with a foreclosure notice right on your front door later.
4. Cut down on expenses
Make healthcare and housing your first two priorities when planning your budget. Look at your income streams and find out how you can reduce your expenses, so you can make mortgage payments on time. Perhaps you can close some credit cards or unsubscribe from unnecessary memberships. Maybe use more coupons when grocery shopping and avoid going on multiple shopping trips. Downsizing your expenses may be difficult at first, but it’s the best way to make sure you have enough money to make your mortgage payments.
5. Use assets
If you find yourself in a rough spot with your finances, you can consider selling your assets to pay your mortgage. A second car, other properties, jewelry, or valuable art an help you avoid foreclosure at least for another month or so.
6. Find more income
Can you get a second job? Is there another person in your household who can work? Can you operate a small home-based business? When faced with the possibility of foreclosure, find other streams of income that can help you keep up with your financial obligations.
Losing a home is one of the most heartbreaking things that a person can go through. If you don’t want to face foreclosure, these tips should help you stay on top of your mortgage payments.