How Does Home Foreclosure Work?

In today's housing market you would be hard pressed to find a home for sale that was not owned by the bank. Foreclosures are becoming more and more prominent as unemployment rates continue to rise. If you are one of the hundreds of thousands of people who are facing a home foreclosure you may be wondering how the processes works.

Sometimes a home foreclosure is the best option that is available for your current situation. In this housing market legitimately selling your home when you don't have the funds to maintain your mortgage payment is near impossible. You could consider a short sale, however you will most likely end up having to pay the difference of the short sale amount and the amount still owed, so you will still be paying on a mortgage for a home you no longer live in.

However once you have lost your home to foreclosure your housing options become very limited. If you need to rent an apartment you will be hard pressed to find a landlord who will rent to someone with bad credit (which you surely will have after a foreclosure). You also may be denied for basic utilities such as phone and gas as these companies to rely on your credit report to determine your dependability.

So what do you do in an impossible situation? You learn all of your options so you can make an educated decision on what is best for your needs.

First of all you will have a total of 7 months from the first missed mortgage payment before the foreclosure process commences. During that period you will have the option to either pay your missed mortgage payments in full or try and negotiate a loan modification to save your home. A loan modification will allow you to extend the life of your loan, lower your interest rate, or both in order to make your payments at a level you can afford. If you are interested in this option you should ask your mortgage company about it immediately. In order to qualify for a loan modification you must be able to provide proof that you are steadily employed.

If you could not work out a loan modification or make up your missed payments by the end of the seventh month your home will sold at a sheriff’s auction. This marks the commencement of the foreclosure process and the beginning of your redemption period. You have the ability to pay off your entire mortgage in order to save your home any time during the redemption period. Otherwise you are able to lawfully stay in your home until the end of your redemption period, at which point you will be evicted.