September 07, 2006
Foreclosure: Know Your Enemy
There’s one good thing about bad news – more often than not, it sends you some form of warning before arriving. No, I’m not joking. If you look hard enough, you’ll find a pattern just about everywhere – from natural storms to stock market crashes. Well, I’m dealing with neither but with something more closer home – foreclosure. It is important to know the warning signs of foreclosure to prevent it from happening to you. So, what exactly are these signs?
Is your house worth less than what you owe? I know this sounds odd especially when house prices are not exactly crashing. But this is a very real possibility. The risk of foreclosures is very high if you’ve taken a loan in excess of 80 percent of your home’s purchase price. The problem is that you are stretching your budget well beyond your means. And in the event of a fall in prices, you could be badly stuck.
Exotic Mortgages: I think I’ve written more and enough about Adjustable Rate Mortgages, other exotic loans and the risks associated with them. For a short period of time, monthly payments are quite low and bearable, and then the problems begin.
Behind on mortgage payments: This is one of the biggest indicators of a coming problem. There could be many reasons like loss of job, illness, death in the family – of the earning member. Just about anything that contributes to reduction in income could adversely affect your payment capacity.
You can address all these factors. But time is of essence. It is important to contact a skilled lawyer before foreclosure starts.
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