Idealistically, homeowners would find paying their mortgage without difficulty; unfortunately though, jobs do sometimes get lost; medical issues arise; and unexpected home expenses do arise from time to time.
Emergency mortgages are available from private lenders who don’t impose the stringent eligibility requirements seen with institutional lenders – this makes the application process faster.
1. It Can Help You Avoid Foreclosure
Foreclosure occurs when a homeowner defaults on his mortgage payments and their lender takes possession of their home. While foreclosure can have lasting repercussions for seven to 10 years, it’s actually preventable with help from government programs and housing counselors.
To prevent foreclosure, it’s essential that if you are having difficulty making payments you contact your lender immediately and arrange a repayment plan, which allows you to add a portion of what was owed each month until you catch up with what you owe.
Avoiding foreclosure by seeking loan modification assistance can also include turning to housing counseling agencies for advice. Through loan modification programs, various aspects of your previous mortgage such as interest rate reduction or loan term extension could be altered accordingly; some even help stop foreclosure if proceedings have already started.
Consider engaging your mortgage lender in a deed in lieu of foreclosure transaction as this can reduce the timeframe and release extra cash in your budget for other expenses or savings goals. Furthermore, this solution could help avoid higher interest fees associated with standard 30- or 15-year mortgages in the long run – saving money over time.
2. It Can Help You Avoid Defaulting
Failing to repay your mortgage loan can have serious long-term repercussions, from damaging your credit rating and ability to obtain loans in the future to increasing the risk of foreclosure if repayment becomes impossible.
Therefore, home equity borrowing should only be done if payments can be afforded and refinancing or selling your home will be possible in case it becomes necessary – in some instances lenders or servicers may even postpone foreclosure proceedings if agreed to an instalment plan which adds past due amounts on top of regular monthly payments over an agreed upon period allowing past due amounts added onto monthly installments over an agreed upon period thereby delaying foreclosure proceedings until repayment plan terms can be agreed upon between parties involved.
3. It Can Help You Avoid a Higher Interest Rate
Life changes, job loss or fluctuating housing market can prompt you to borrow more than the value of your home is worth; this practice is known as “leveraging your home”. If this is all that you own, and if debt payments become arrears due to lateness or financial emergencies arises – seek solutions through lenders or local charities as soon as possible.
Consider refinancing your mortgage to reduce interest rates or shorten the time it takes you to repay. With that money saved up from refinancing, it could help pay down other high-interest debts like car and student loans or save for a future vacation trip.
4. It Can Help You Avoid Scams
Many online lenders provide quick applications with minimal documentation and credit checks; you may prequalify without negatively affecting your score; funding can often occur as early as the next business day.
Compare rates and terms offered by various lenders in order to identify which offers the most cost-effective emergency mortgage loan package. It’s essential that you know exactly how much your monthly loan payment, including all fees, will be before making your application.
Your new house payment should fit comfortably within your budget to protect both yourself and long-term credit health. Furthermore, consider ways you can save for a down payment. Can you cut back on expenses such as cell phone plans, groceries, auto insurance or entertainment in order to build up savings?
When receiving gifts or bonuses from relatives or work, put them toward mortgage savings instead. Alternatively, selling items you no longer need may help bring in some extra income for savings purposes.
Be wary of scammers posing as housing counselors or lawyers offering to assist homeowners modify their mortgages or avoid foreclosure. Any individual offering this assistance must do it free of charge from your mortgage servicer or HUD-approved housing counselor; scammers often attempt to charge homeowners upfront fees in return for promises to prevent foreclosure by either transferring deeds via Quit Claim Deed or pocketing upfront fees themselves.
Also read: Use Your Home Equity to Reach Financial Goals with a HELOC
