When you face challenging times financially, it may seem impossible to keep up with all your financial obligations. If you don’t pay your mortgage regularly, you could face mortgage default which could put you at risk of losing your home. Facing the loss of your home can be devastating but there are ways to prevent this by making the right financial steps. As a New Jersey resident, here are some important things you should know.
What does mortgage default mean?
Mortgage default occurs when a borrower does not make monthly payments to their home loan interest or principal balance. Default also occurs with student loans and credit card payments. If you repeatedly miss payments or stop making your payments altogether, this can have serious short-term and long-term consequences.
If you go into mortgage default, you are at risk of damaging your credit and losing your home. In the future, the default could increase your interest rate for other debts and make it harder to get a loan for major purchases.
How does mortgage default happen?
The most common way for mortgage default to occur is to miss monthly payments. However, you can also go into default if you don’t pay your homeowner’s insurance or property taxes. If severe damage to your home has decreased the property’s value or you transferred ownership of your home to someone else without permission from your lender, you should go into mortgage default.
If you find yourself in default on your mortgage, you’ll have a chance to repay your debt before your lender takes over your property. That’s why you should get in touch with your mortgage lender right away to discuss repayment options.