If you are contemplating reinstating your mortgage, it is probably because your bank has started foreclosure proceedings. You now have to worry not only about losing your home, but incurring a terrible credit score. Although reinstating your mortgage won't improve your credit score immediately, it is a far better alternative than letting the bank proceed with foreclosure.
Identification of Need
Reinstating a mortgage -- paying the delinquent balance so your account becomes current -- probably won't have much of an affect on your credit score immediately. That's because you probably have several missed payments on your record. Lenders tend to focus on your past two years' of payment history, and the FICO scoring system considers recent late payments a serious derogatory item. However, you may be able to stop the bleeding. by catching up on late payments.
Benefits of Reinstatement
Once the bank completes foreclosure proceedings, your score will take an even further drop. Anything you can do to stop foreclosure will boost your credit rating. Also, as long as keep paying your mortgage on time, your score should improve. It could take several years before your score recovers. Late payments, for instance, stay on your credit record for seven years.
Considerations
Banks usually want to keep you in your home. That is because foreclosure proceedings cost thousands of dollars, and the sale of the home might not cover your mortgage. It takes about a year for a bank to receive a foreclosure authorization, so you should have several months to gather enough money to cover the defaulted portion of the mortgage and any fees, if you choose to reinstate the mortgage.
Possible Steps
Talk to your lender as soon as you miss a payment about a possible loan modification. The bank might restructure your loan, such as lengthening it to lower your monthly payment or by reducing the interest rate, if it means you can continue to pay your bill on time. Initiate contact as soon as possible, because lenders do not have to negotiate your mortgage. They can continue foreclosure as soon as you default on the loan.
0 comments:
Post a Comment