Avoiding Power of Sale or Foreclosure
Home Mortgage Ontario Guest Post By Michelle, @financeport
A mortgage loan is one that is secured against a property by using a mortgage charge. Since most clients looking to purchase a home do not have enough money to make a cash purchase, mortgage financing is requested from a bank or mortgage broker. By making monthly payments outlined in the mortgage contract, you can expect your credit score to increase thus improving your chances of being approved to borrow money in the future.
If you fail to meet requirements of the mortgage agreement, such as missing mortgage payments, the lender can initiate the power of sale process in Canada or foreclosure process in the United States. Since lenders ensure that they are well protected when they approve your mortgage, violating the conditions of your mortgage can result in your mortgage being called early or legal action being taken against the borrower. Similar to the negative credit effects missing credit card payments can have on your credit score, violating your mortgage agreement will also leave blemishes on your credit and thus cause your beacon score to drop.
Having Trouble Making Your Mortgage Payment?
If you find yourself having trouble making ends meet at the end of the month, it is crucial that you do not avoid your debt obligations. Here are some tips to assist you if finances get tight:
Find a Way to Make Your Payment – Ensure that your debt obligations are taken care of; especially your mortgage. If your financial trouble is only short-term or temporary, consider using a line of credit or a payday loan only if in dire straights! This type of borrowing cannot sustain itself long-term.
Plan Ahead – If you think you could have a problem in making mortgage payment then plan ahead; approach your lender and discuss the matter, you can also take advice from a debt manager. There are some financial institutions which provide assistance to get rid of debt and your debt manager can approach your lender on your behalf.
Be Honest – Call your lender and talk about your circumstances honestly; by being forward, it is possible that alternative arrangements can be made.
Don’t Wait to Act – If you delay and do nothing, there is a chance that it could be too late to remedy your financial problems. This could lead to losing your home, equity and credit rating.
Create a Budget – Monitor where you are spending your money and determine ways to eliminate unnecessary spending. Entertainment and other non-essential expenses should be eliminated.
Don’t Walk Away – Abandoning your home to avoid dealing with your financial situation will affect your credit rating and will remain on your credit report for 6-7 years.
Consider Selling Your Home – If your finances are tight and there is no end in sight, consider selling your home and downsizing or renting if necessary. While this may not be what you wanted to hear, facing power of sale or foreclosure is much worse.
While it may seem easier to avoid your mortgage and finance problems, acting early to create a plan will ultimately give you the best chance at avoiding the power of sale or foreclosure process. Have more questions or have some advice to share with our other readers? Leave us a comment below!
Subscribe via Email
- How Much Are Closing Costs?
- Benjamin Tal Economic Buzz – Financial News Update
- How Property Taxes Work on New Condos in Toronto
- Personal Finance for the Newcomer to Canada – The Entire Walkthrough
- Single Mom with Bad Credit?