Now that you’re a homebuyer, your most important financial obligations is your monthly mortgage payment. This payment should be your top financial priority. If you fall behind on your monthly mortgage payments, the lender has the legal right to foreclose on the loan. In the event of a foreclosure, the lender can force you to move out and then sell your home to pay off the loan.
You risk losing your home, whatever money you have invested in it (including the down payments, closing costs, and all the monthly payments you have made), and your good credit. Legal fees may also be added to what you owe on your mortgage, once a lender initiates foreclosure proceedings.
Even worse, if your property has dropped in value since you bought it, the foreclosure sale may not bring a high-enough price to cover your outstanding balance. If this occurs, the lender, in some states, may have the right to obtain a deficiency judgment and require you to repay the remaining outstanding balance.
What is a Short Sale?
In a short sale, the servicer allows the borrower to list and sell the mortgaged property with the understanding that the net proceeds from the sale may be less than the total amount due on the mortgage. The short sale must be an arm’s length transaction with the net sale proceeds (after deductions for reasonable and customary selling costs) being applied to a discounted (“short”) mortgage payoff acceptable to the servicer. The servicer accepts the short payoff in full satisfaction of the total amount due on the first mortgage.
In the End…
Buying a home takes time and hard work. It is perhaps the greatest financial investment you will ever make. If you ever find that you are unable to keep up with your monthly payments, be sure to contact us immediately to discuss the situation and try to work out a solution. It is essential that you protect this investment by following a regular home maintenance program and developing a sound financial management plan. If you cooperate with the lender, you may be able to avoid foreclosure and the loss of your home.
As you pay down your mortgage over time and the market value of your home increases, you will have the satisfaction of knowing that you are building up substantial equity for the future. If you or your loved one is falling behind on your payments, call us to set up a free consultation with our real estate attorney. Good luck and we hope you will enjoy the many benefits of homeownership!