There is no doubt that second mortgage loans are highly sought after. For one reason or another, taking out a second mortgage on a home is extremely popular. For some, they want to renovate the property to make the necessary improvements, and for others, they want to use some of the equity they have to pay off old or outstanding debts. There’s a host of reasons why you could get a second mortgage, but, while they offer a lot of financial assistance, they can also bring future financial woes. So, let’s say you purchased a home and in five years taken out a second mortgage, but, you defaulted within the first year, what would happen?
You May Be Forced Into Foreclosure
A lot of homeowners mistakenly believe that since they’re paying their first or primary mortgage, they can’t lose their home. Well, it’s a nice thought, but if it was that easy everyone would get a second mortgage and default. The truth is that, depending on how much you owe, your home might be forced into foreclosure by the mortgage lender. Why is that? The lender believes the only way to recoup the money is to foreclose the home so that the first and second mortgages are paid off. However, with second mortgage loans they can be unpredictable because some lenders might off some leeway before foreclosures. Some lenders might offer a six month break to allow you to catch-up, while others will take action to recoup their money. Read more!
Contact the Lender
If you believe or know you’re struggling with the mortgage payments you need to get in contact with the lender or lenders. Why does it matter? Well, you can talk to someone and tell them about your situation and they may be able to offer some leeway so that you don’t lose the home. Some lenders will allow you ample time to catch-up with the payments missed or will look at other options to prevent a loss of the property. However, some second mortgage loans won’t be in the mood to talk and will still demand payment. When you’ve constantly been late with payments, you should note that your credit may also take a hit.
Seek Legal Advice
To be honest, if you’ve tried talking to the lender and they haven’t really helped, you might want to speak to an attorney and get some advice there. Now, they can’t prevent the home from going into foreclosure but they may be able to make communicating with the lender easier. Also, they may help you understand second mortgage loans and your responsibilities and obligations a bit better. Sometimes, they might be able to help work out a payment reschedule that suits both parties. Of course, some attorneys will advise you to sell so that you repay the mortgages off and don’t walk away without something.
Defaulting Is Common
Strangely enough, defaulting on a second mortgage is not as uncommon as you might think, but that doesn’t make it okay. When you’re struggling to cope with the repayments you need to speak to someone who can help. You could contact a financial advisor, a lawyer or talk to the mortgage lender directly. There are lots of options and you should explore them all so that you can get the help you need and avoid losing the home. Second mortgage loans are tricky so know the rewards and risks before you get one. For more details, visit: https://www.mortgageloan.com/consequences-second-mortgage-default-7823