With the rising number of foreclosed homes in the market and the growing anxiety on the part of troubled homeowners who have started missing their mortgage payments, it is easy to lose hope and think that there is no longer a way out of this problem. And everybody seems to think that once a person missed a mortgage payment, foreclosure is already inevitable. This assumption is definitely baseless. Missing a payment will not automatically deprive you of your home ownership. In fact, you can even use this challenge and turn it into an opportunity for you to save more money.
When you miss a payment, the bank will usually send you a notice of default indicating that you have unpaid obligation. Your bank would not immediately institute a foreclosure action against you but would even allow you to update your account within a specific period. Only when you have failed to satisfy this requirement will the bank try to file a foreclosure against you.
But even prior to this, you can already something about your situation. Foreclosed homes are not really desired by many banks since they ultimately mean a string of bad lending decisions. So the bank would actually try to work with you to alleviate your situation. As soon as you realize that you will not be able to meet a payment schedule, it is highly suggested that you already contact the bank and explain your situation. Banks are used to borrowers asking for a workout program and you are not an exception. Do not be embarrassed about admitting your predicaments. The stakes are too high for you to get your pride in the way.
The bank would then try to get your financial data so that they could assess your current credit. The bank will have to determine your debt to income ratio so that they could ascertain which program would be best for you. Depending on the outcome of their evaluation, they can propose a workout plan for you that will best suit your financial condition. Among the things the things that you can try to ask them about is the possibility of cutting your interest rate, extending your amortization, and distributing your missed payments over a certain period. All these will help you keep your home and avoid for it becoming one of those foreclosed homes.