How To Avoid Foreclosure!
How To Avoid Foreclosure in Rhode Island? Foreclosure can happen to anyone, and it’s important to learn about how to avoid foreclosure so you can keep your home, even if you are facing financial difficulties. Foreclosures can begin when you are 30 days past due on your mortgage payments. Here are some useful tips on what you can do to avoid a foreclosure and not lose your home!
1. Lenders Rely on Your Income
If you’re facing difficulty paying your mortgage, you must sit down with your lender and figure out how to stay current on your payments. Lenders will often work with homeowners struggling to make their payments if they can verify that their income is stable and consistent. At least one of your lenders will have income-verification requirements as part of its approval process, so prepare yourself for these questions when applying for a loan modification.
2. Keep Up with Your Mortgage Payments
Just because you’re late on a payment doesn’t mean foreclosure is around the corner. However, if you don’t make good on your mortgage, it will be difficult to avoid foreclosure entirely. So don’t wait for that late payment or warning letter—get in touch with your lender as soon as possible, set up a plan for making payments on time going forward, and avoid losing your home.
3. Know What You Can Afford
You can avoid foreclosure by knowing what you can afford before buying a home. A good rule of thumb is that your mortgage should not be more than 25%-30% of your take-home pay. This will allow you to save for emergencies and unexpected expenses. It will also help you determine if buying a new home is within your budget at all.
4. Choose Lower Interest Rates Over Shorter Terms
It might be tempting to choose a lower interest rate over a longer-term but think about how that decision will affect your monthly payments. Most borrowers who get into trouble do so because they don’t have enough cash flow each month. So, if you end up defaulting on your loan, it’s possible that shortening it won’t make much of a difference anyway. Be aware of your budget and avoid making decisions solely on interest rates.
5. Refinance If You Can Lower Your Rate by More Than 0.5%
Mortgage rates are still at historic lows, which means now is a great time to refinance your home. When refinancing your mortgage, you may be able to lower your interest rate by more than 0.5%, which can save you thousands of dollars over time and help avoid foreclosure.