Although the United States is recovering economically, millions still face the risk of foreclosure. Regardless of income level or neighborhood, foreclosures can happen anywhere and affect anyone. The process begins when a homeowner begins missing their mortgage or loan payments and their lenders make legal moves to repossess the property to recoup lost funds.
Foreclosure Statistics
Some individuals decide to file for bankruptcy to avoid foreclosure. However, being aware of the top 7 foreclosure pitfalls can help you avoid both situations altogether. Reasons people fall behind on their foreclosure payments include:
Adjustable rate loans Many homeowners are tempted by the low payments and interest rates, but are caught off guard once the cost accelerates alongside the interest. When they are buried under unbearable debt, they are faced between filing for bankruptcy or foreclosure.
Unemployment In this shaky economic recovery, layoffs can come unexpectedly. Since most Americans don’t have enough in their savings accounts, sudden job loss can become a cause of foreclosure.
Credit card debt More than half of the population has credit card debt. When the debt is uncontrollable, some people are faced between missing their credit card payments or their mortgage payment. In the end, many escape bankruptcy only to file for foreclosure.
Medical expenses and illness Medical reasons are the cause of 13% of foreclosures nationwide. Whether it’s the added stress of medical bills or the loss of a job due to sickness, illness plays a major role in both forecloses and the decision to file for bankruptcy.
Divorce At the end of the relationship, the heightened emotional state and legal proceedings can make it easy to ignore financial issues. Suddenly, divorced individuals realize that payments have been missed and that neither party can shoulder the bills on their own.
Multiple bills There are other bills aside from credit card debt and home loan payments. Sometimes people are so concerned about their credit score and avoiding a Dallas bankruptcy that they mis-prioritize which bills get paid and ignore their mortgage.
Sudden relocation Whether you moved because of your job or because you wanted to, a sudden relocation might not give you enough time to sell your home. Eventually, paying two mortgages becomes unbearable, and the choice between a foreclosure and bankruptcy must be made.
Related: 5 Steps to Prevent Mortgage Default When You Lose Your Job
As you can see, the top causes of foreclosure can creep up on you when you least expect it, buy even when you're in a tough spot, you have options. If your house is in good condition, but you owe more than the house can sell for, a short sale may be an option. If your house is in rough condition and you have some equity, but don't have the time, money, or energy to fix it up to sell, there are many investors like ourselves that can buy properties in any condition for cash, and can close in 2 weeks without needing a bank, saving your credit and putting a little money in your pocket, even when foreclosure is right around the corner. If that interests you as an option, click here. Lastly filing bankruptcy is also an option that can delay or even avoid foreclosure, but will tarnish your credit for the next few years. Whatever best fits your situation, we hope you've learned a helpful thing or two, as Fernbrook Properties tries to make foreclosure a little less scary. To find out about the foreclosure process in Connecticut and beyond and how many payments you can miss before foreclosure happens, check out our article below.