What happens if you don’t pay your mortgage for reasons of whatever.
Mortgage is when you take a loan out on something that is used as a collateral against that loan, but most people have it associated with a house loan.
When you apply for a mortgage banks have a certain criteria you have to meet. Like how much percentage of your income have to cover the monthly payment. Many banks have 28% percent established as a rule of thumb. Meaning, 28% percent of your income have to cover the payment on the house.
If your income change for the worst and you already have a mortgage on your house and you don’t pay your mortgage because you ran into difficulties, the banks don’t care, because a contract is a contract.
You can go to the bank and refinance your house if they approve you. If not, you are stuck with your payments until it’s paid off.
If you don’t pay your mortgage the following will happen.
First you will get a letter stating you had missed your monthly payment and please pay it in within 10 days or they might have a date like until the 25 th of the month. If you don’t pay your mortgage within the given time, you will get another letter and a phone call.
Usually people that have missed a payment are having financial difficulties and banks aren’t stupid. They know what’s going on, but don’t want your house, so they’ll give you an opportunity to right the wrong.
If you still don’t pay your mortgage, they’ll start a reclaim procedure which is demanding the full loan amount. Of course they know they don’t have a chance to get it, but they have to play by the rules and give you time to come up with the money.
If you don’t, they’ll start a foreclosure procedure. Foreclosure is something when they take the house away from you if you don’t pay your mortgage. Once the house is taken away from you, they get an appraisal to see how much it’s worth and sell it at an auction.
If it sells for more than what you owe, including their various fees and the remaining mortgage amount, you’ll get the difference. If it sells for less, you get nothing. Either way, by not paying your mortgage, it’s going to negatively effect your credit rating.
Foreclosure usually starts when you have missed more than three (3) months of mortgage payment. Some banks might allow you to stay in the house until it’s sold, some won’t.
To stop the foreclosure you can file personal bankruptcy and that’ll put the foreclosure off until the bankruptcy case is settled in court. Even after that, you can appeal the decision and gain some more time.
Not unheard of people staying in their house for a year or more by appealing the case several consecutive times. But, none the less sooner or later you will have to move out unless you come up with the full arrears plus the various bank fees accrued during the process.
If you don’t pay your mortgage be prepared to loose your house.