Financial advisers are firm that if you are not ready to keep up with the responsibility of repayment, you do not have the right to take out a loan, whether it’s a mortgage or anything else. But the lure of the deal is so tempting for some that they even miss out the possible effects of missing on the payments afterwards.
After all, who doesn’t want to own a house, even if it is not a dream home yet? Mortgage lenders put that possibility in the perspective. By providing an increasingly attractive mortgage rate here in Utah, many are drawn to striking a deal with a lender, even before they checked their financial capacity and capability.
When You are Not Prepared
As if it actually needs mentioning, you must be prepared in order to be sure that you can handle a mortgage loan. Before diving in, you must study your finances carefully, determining where you will actually draw the funds for the repayment.
If not, you will risk missing out on your mortgage payments and suffering from its impending effects such as:
- Being charged with fees. Lending is a business. You cannot expect your lender to just sit there doing nothing when you are already missing out on your responsibility. In fact, late fees are well included into the terms, signifying the actual amount you will be charged if you miss out on your payments for a certain period of time.
- Being considered in default. When you miss out on your mortgage payments even for just a day, you will be considered in default. That means, the lender would have the power to file for a Notice of Default at the county, which could then lead to foreclosure. Although most would not pursue such a case if you are only missing out a few days on your financial duties, it could be a different story altogether when you repeatedly miss out on your mortgage.
- Suffering from a foreclosure. If your lender has processed a Notice of Default and you have not acted on your mortgage payments, the lender would gain the power to sell your home, tagged as a foreclosed home, or they can put it up for an auction. In both cases, you will be at risk of being homeless.
If you think the situation cannot get worse, think again. To save yourself, make sure that first, you are financially ready to take out a mortgage loan before you sign up and only sign up for a mortgage that you can afford.
No matter how fair or low the mortgage rate is, it would be meaningless if your budget would not allow for a repayment. Also, you must act on the situation before it gets uglier.
If you miss out on your mortgage payments, make sure to keep in touch with your lender in order to find solutions that will prevent a financial breakdown. Talk about temporary payment reduction or refinancing. Those things can save you from bigger troubles, especially from running the risk of losing your home.