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If your home is in default, your goal should be to get a mortgage reinstatement. Many people mistakenly believe that once their home is in default, they have to let it go to foreclosure. While many houses do go to foreclosure, there are other options. If you manage to get your home out of foreclosure, you will have to go through a mortgage reinstatement period to do so. Here is what you should expect during a mortgage reinstatement period.
When you fall behind on your mortgage payment, you will usually receive some type of warning along with late fees. If you still do not make your mortgage payment, the mortgage will then go into default. When this happens, you will receive a letter from the bank that tells you that your home is in default. It will say that your entire mortgage balance is due immediately. If you cannot pay the entire mortgage balance immediately, your bank will start the process of foreclosure on the house.
When the default period begins, the bank will file the necessary paperwork with your local court. If nothing is done on your part, the court will rule in favor of the lender and your house will go into foreclosure. The bank can then auction off the house or sell it.
While this is the worst case scenario, there are other options. If you can get things back on track, the bank will reinstate your mortgage. The foreclosure process can take up to a year depending on what area you live in. Therefore, you will have plenty of time to try and work something else out and get your home into the reinstatement period. During this period, the bank will go to the court and cancel the foreclosure proceedings.
While getting your house out of foreclosure is difficult, it can be done. For one thing, you will want to take care of the many late fees that are coming to you from the beginning. If you can get these under control, you may be able to get back on a payment schedule.
Once you enter the default period, it is essential to talk to your lender. Many times, the lender will be willing to work with you to achieve a peaceful resolution. If you are evicted from your house, they will stop receiving a monthly payment from you. Therefore, they want to do everything in their power to keep you in your mortgage. You may be able to convince them to modify your loan to fit your budget. They may be willing to give a lower interest rate and a lower payment. If you can prove to them that you have your act together now, they will be very likely to help you out. At this point, you can successfully enter the mortgage reinstatement period and stay in your house.
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- FHA Eligibility with Bankruptcy and Foreclosure
- Should You Refinance? Make Sure the Timing is Right
- FHA Loans for a First-Time Home Buyer