What If I Stop Paying My Mortgage?
HOME LOANS, TIPS FOR SELLERS
November 8th, 2009
Many homeowners across the nation, particularly those that owe more than their home is worth in today’s market, are asking themselves this question before making their monthly mortgage payment. Here is a time line of what to expect:
- Expect your lender to report your missed payment to credit bureaus by the first day of the following month.
- The late payment knocks down your credit score by up to 200 points assuming this is the first missed payment.
- Your other creditors will take note of your nosediving credit score and either raise your interest rates or cancel your credit account or at least lower your credit limit.
- If your credit limits are lowered, this triggers and increase in something known as the utilization rate, which lowers your credit score even more. This will impact your score for up to 7 years with the greatest impact occurring the first two years.
- Your lender will contact you to see what is going on. If no payments are made within 90 days, your lender may refuse any future payments unless you have contacted them beforehand and a course of action is agreed upon.
- The foreclosure process generally begins once four payments have been missed. The process takes 4-5 months start to finish if the lender pursues the foreclosure vigorously under a deed of trust.
- You will be thrown out of your home. Some will offer cash for keys, others will hire an attorney to do an eviction. With the backlog of foreclosures these time frames may be extended by several months.
If you want to keep your home, call your lender and discuss loan modification options before you miss any payments. You may also be able to deed the property to the lender and rent it back under a new program for loans held by Fannie Mae and Freddie Mac. Seeking the advice of a real estate attorney may be in order before you decide a course of action. Contact me if you have any questions.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
CORNER OF COURT AND PLACER IN REDDING
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
