Owning a home is a common long-term goal for most Americans. Things can get complicated, though, when financial troubles arise and you can’t pay your lender on time.
After a number of missed payments (or violation of your loan terms), your lender may choose to foreclose your home.
There are some things about foreclosure law you need to keep in mind, but not everybody knows what to consider.
Not sure where to start? Don’t worry, we’ve got you covered.
Let’s take a look at everything you need to know.
1. You Can Negotiate
When a lender begins the foreclosure process (this starts with sending notices), you don’t have to give up all hope. Instead, you can contact them and try to come to a mutual agreement.
You have a few options when it comes to negotiation, too.
You could pay off your missed balance entirely. Or, you could factor in your missed payments into your future payments and start a new payment plan from there.
You’ll never be able to reach this agreement if you don’t contact your lender, though, so make sure you reach out to them if they’ve notified you of their intention to foreclose your home!
2. Laws Vary by State
Foreclosure isn’t the same in every state, and there are often a handful of differences from one state to the other.
The biggest factor to consider is whether your state is considered a judicial state or non-judicial state.
In a judicial state, the court is far more involved in the foreclosure process. Foreclosure in these states functions like a lawsuit in state court in front of a judge.
In a non-judicial state, the court doesn’t supervise the foreclosure. This means that the owner of the property doesn’t need court approval before they sell the property.
Non-judicial state foreclosures aren’t always this straightforward, though.
For a further example, you can see what the guys over at BiggerEquity have to say about the foreclosure process in Maryland (a non-judicial state).
As you can infer, judicial states offer you a better chance of delaying/resolving your foreclosure issue. However, this is only useful if you can develop the means to resolve your missed payments.
3. It Could Affect Your Future Funding
Having your home foreclosed can send a message to lenders that you’re unreliable when it comes to paying back the money you borrow.
As such, lenders like Fannie Mae have a policy that declares seven years pass before you’re able to secure another mortgage loan.
Similarly, a foreclosure will deliver a powerful blow to your credit, which can adversely affect your ability to secure loans from other lenders. Bad credit also comes with a handful of other complications.
Understanding Foreclosure Law Can Seem Difficult
But it doesn’t have to be.
With the above information about foreclosure law in mind, you’ll be well on your way to knowing how to handle the process when the time comes.
Want to learn more legal info that can help you stay prepared for the future? Our blog has plenty of useful info for you to check out today.