What Happens when You Default on Your Mortgage?
Mortgage is a secured loan; when you apply for mortgage you put your house as the security. Hence if you are not able to pay off your loan your lender can repossess the house and sell it off on property auction to get back their fund.
Homes are usually sold for much lower price than the market rate at the auctions. Hence, chances are high that it will not be sold for attractive price. If it does not cover the amount that you owe to your lender, then your lender would again chase you for the deficit.
Moreover, this history of repossession would appear on your credit report and remain there for long. Your future lenders, landlords, employers or whoever run a credit check would find this record and evaluate you as a ‘risky’ subject.
That is the reason all the homeowners try to avoid home repossession. As soon as you feel that you might face repossession, talk to your lender. They might offer you some mortgage rescue plan. If no repayment option works, find a cash buyer and sell house fast for quick cash. Clear the mortgage debt with this money and keep your credit unhurt.
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