When you have missed some mortgage payments and are in fear of foreclosure, you have a big decision to make. Should you allow the foreclosure process to continue, or should you fight it and try to stay in your home? While your emotions may try to dictate the answer, there are some important financial considerations that you should think of, as well.
Before making your final decision, you must evaluate your financial situation, which has likely changed since the time you purchased your home. Here, we will look at why foreclosures are so common in Florida, and the questions you should ask yourself if you are in fear of losing your home.
Why Are Foreclosures So Common in Florida?
It often seems that Floridians are at a disadvantage compared to the rest of the country because the sad truth is that foreclosures are extremely common in Florida. In fact, Florida has been a leader in foreclosures in the United States for several years. When considering the reasons for this, it is really not surprising to hear.
The first factor that led to so many foreclosures in Florida was the subprime mortgage crisis. During the years leading up to the Great Recession, lenders were eager to finance homes Floridians simply could not afford. Borrowers did not even always know they were taking on more than they could handle because very little was needed for a downpayment at that time, and interest rates were incredibly low. Lenders took advantage of that and financed a great number of homes in a very short period of time.
Once the housing crisis hit, many people simply left Florida, leaving behind their underwater homes that were impossible to sell, and instead letting the homes go into foreclosure. Florida, like the rest of the country, started to rebuild and borrowers in the state found themselves in a much better position after just a couple of years. Not long after, the COVID-19 pandemic hit and that left borrowers struggling again.
State and federal governments tried to thwart another housing crisis by instating moratoriums and other financial relief intended to help homeowners get through the pandemic. Unfortunately, those measures were short-lived and this past October, foreclosure filings once again increased in the state despite the fact that moratoriums were in place.
Due to the fact that foreclosures are so common in Florida, it is critical that homeowners determine whether or not they should fight it if they find themselves in the position that they may lose their home. If you have missed some mortgage payments, or the foreclosure process has already started, there are three questions to ask yourself when deciding whether or not you want to fight it.
Is There Equity in Your Home?
If you are facing foreclosure and you have equity in your home, you may want to fight foreclosure so you can hold onto that equity. The equity in your home is the difference between the amount you still owe on the home and the amount you can sell it for. If you are unsure of whether you have equity in your home, a real estate agent or a foreclosure defense lawyer may be able to advise on your home’s current worth.
However, you should never try to keep a home simply because you want to hold onto the equity. If you have equity in your home, you also need to consider if you will be able to afford your mortgage payments in the future. When you think you cannot afford your monthly mortgage payments, it may make sense to get rid of the mortgage and try to sell your home to protect your financial future.
Can You Afford the Mortgage Payments?
Many people pay at least 50 percent, if not more, of their gross income towards their mortgage every month. The more of their income they pay towards their mortgage, the less they have for the basic necessities of life, including food, transportation, utilities, and other out-of-pocket expenses, such as medication. In these situations, a person’s financial situation is simply not sustainable. If you are in this position, it may not make sense to fight foreclosure, particularly if you have lost your job or are in another position that will make paying your mortgage payments more difficult.
Generally speaking, you should put no more than 30 to 32 percent of your gross income towards your mortgage. However, this rule of thumb does not always apply. For example, a person that has a child with special needs will need to put more money towards childcare, so they may only be able to afford to put 20 or 25 percent of their gross income towards housing.
Can You Lower Your Debt?
Sometimes, keeping your home may be a simple matter of lowering your debt load so you can afford your mortgage payments.
The following tips can help determine if you can lower the amount of debt you pay on a monthly basis, or if you should let your home go into foreclosure.
- Make a budget: Take a real hard look at your income and expenses by writing them all out. If there are expenses you can get rid of, you may be able to afford your mortgage. If all of your expenses are essential though and you cannot get rid of any, you may have to let your home go into foreclosure.
- Lower your mortgage payments: Before you give up and allow your home to go into foreclosure, you should always speak to your lender. Many lenders will offer loan modifications or other options that may allow you to stay in your home.
- File bankruptcy: Certain types of bankruptcy, such as Chapter 13, will allow you to restructure your mortgage payments, as well as your other debt, so you can keep your home.
Call Our Foreclosure Defense Lawyers in Florida Today
One of the best ways to determine if you should allow your home to go into foreclosure is to speak to a foreclosure defense lawyer in Fort Lauderdale. At Loan Lawyers, we know the defenses available that can help keep you in your home and we will negotiate with your lender or fight your case in court to give you the best chance of success with your case. Call us today at (954) 807-1361 or fill out our online form to schedule a free consultation with one of our skilled attorneys.
Loan Lawyers has helped over 5,000 South Florida homeowners and consumers with their debt problems, we have saved over 2,000 homes from foreclosure, eliminated more than $100,000,000 in mortgage principal and consumer debt, and have recovered over $10,000,000 on behalf of our clients due to bank, loan servicer, and debt collector violations. Contact us for a free consultation to see how we may be able to help you.