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What happens when you miss your mortgage payments?

missed mortgage paymentsWhat happens when you miss your mortgage payments?

There are a few things that happen when you miss your mortgage payments. The first and most urgent is that your lender will decide to start the foreclosure process when you fail to make your mortgage payments on time (known as defaulting on your loan). You will probably start getting letters after the first month of being delinquent and calls after the second month. Foreclosure is a ticking time clock that can normally happen anywhere between 3 and 6 months of missed payments, depending on your bank and laws of the state that you live in. Secondly, as you miss your mortgage payments, your credit report will reflect late payments and will adversely affect you credit scores.

As mortgage payments are missed, your bank will first try to reclaim the late payments by calling you and sending mail. Each of these methods will demand payment (plus interest and late fees). If this does not work, they will send you a Notice of Default and continue in their attempts to collect full payment. After additional months of missing our mortgage payments, your lender will send you a Notice of Sale and will foreclose on your home.

Your lender will attempt to sell your home at auction to the highest bidder (often way below the value of the mortgage). They may demand an eviction (through a court order) and, you could still be liable for the remaining amount (meaning they will keep coming after you until everything you owe is paid in full).

When this happens you may have only 3 days to vacate your home. In many states, you may still be liable to owe thousands of dollars (if not tens of thousands) until the full balance is paid. This is known as a deficiency judgment.

The foreclosure will also appear on your credit report for the next 7-10 years (meaning you cannot get a new loan until the foreclosure disappears). Because of the foreclosure and eviction you will have difficulty renting.

If you want to avoid this fate, a short sale is the better option for you.

Call us with any questions or for immediate assistance. 888-746-7820

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