When we take mortgages out, it’s usually with a sense of gratitude and anticipation towards purchasing a house, and there is nothing more reassuring in life than to have a home to go to at the end of every day. There are a number of reasons to purchase homes: building up equity and trying your hand at selling them, to name a few.
However, most people simply want some place to call home, to provide a sanctuary for themselves and their families. A large part of the American Dream is simply to own your own house, but all of that is threatened if you are facing foreclosure. Most people can’t foresee foreclosure happening, and when it does, most people are powerless to stop it.
Perhaps most startling is that bank foreclosure is so widespread at the end of the first decade of the new millennium, but it’s really not that surprising considering the circumstances. Firstly, the whole world is in an economic recession due to the American housing bubble bursting. Housing prices had grown so high, and loans were so easy to acquire, that many, many people were living outside of their means to provide, and everyone was spending more than they earned. When all of this unpaid debt accumulated, it created a series of complex problems, increasing foreclosure rates across the country.
With rising unemployment, less people are working, and many people who are stuck paying off mortgages find that they aren’t getting any money. When the money isn’t coming in and the mortgage defaults, the bank tries to enter the agreement into foreclosure. Then, the house is set up for an auction, usually at greatly reduced prices.
For people fortunate enough to have money, they can get some of the lowest prices on homes. Conversely, for families ousted by this process, foreclosure is a painful and gut wrenching affair, and the fact that most people are powerless to stop it only makes it worse.
Even worse, home owners run the risk of having to pay additional money on the mortgage if it defaults, the house is sold in an auction, and the sale is not sufficient to pay off the remaining principal. Foreclosure is just one eventuality that people should be prepared, and with any amount of luck, it won’t happen to your family.
If you are afraid that it is imminent, there are steps you can take to cut down on other expenditures to focus paying down your mortgage, and there are other financial options available at your bank to help deal with debt. However, the best time to take care of your finances is always before they get out of hand.