Personal Finance Advice

If your neighborhood is lined with homes for sale due to foreclosure you may start to wonder if there is more to going into foreclosure than not paying your monthly mortgage bill.  With so many foreclosures going on around you and making the national news you might get worried that even though you pay your mortgage promptly every month there might be some chance that you might become a victim of the mortgage crisis too.  What exactly can lead to foreclosure?

Not paying your mortgage.  Of course, not paying your monthly mortgage payment is a surefire way to land into foreclosure.  Lenders are often willing to work with people by allowing them to skip payments or by forgiving accumulated fees and other expenses, but the fact remains that if you consistently ignore the demands for payment you’re going to lose your home to foreclosure.

Not paying your equity loan or line of credit.  Even those these types of loans aren’t considered to be primary mortgages they are still mortgages nonetheless.  You might hear your lender call them second mortgages or subordinate mortgages.  You got such a great interest rate on your equity loan or line of credit because your house is the collateral on the loan.  Even if you pay your primary mortgage monthly like a champ you’re still at risk for foreclosure if you don’t pay your equity loan or line of credit as originally agreed.

Not paying your property taxes.  Your mortgage is paid monthly, your equity loan is up to date, but for one reason or another you don’t pay your property taxes.  If you do this long enough you’re going to lose your home.  Property taxes are no joke, and you can’t choose to simply ignore them. 

Obviously it’s important to stay current on any expenses related keeping your home.  If you have to make the choice between paying a credit card bill or paying your equity loan, you should always choose the bill that is attached to your home.  After all, credit card collectors might be annoying and persuasive, but they can’t take your house away from you.

Foreclosure isn’t just something that happens to people unexpectedly and without warning.  Many people fall into unfortunate personal financial situations but get plenty of warning before the foreclosure is initiated.  In other words, your lender isn’t going to one day arbitrarily decide to take your house away from you.  That’s not the way it works.