When homeowners take out a mortgage to buy a home they are legally obligated to make the payments on time but the details of what really happens when borrowers skip the mortgage are unknown to many. While most lenders will work with owners in dire financial circumstances, those who stop making payments begin down a path with serious consequences.
First come the late fees. These are typically assessed after 15 days come with the first of the endless phone calls and letters. Should these go ignored, a mortgage may enter a state of 'default', meaning the bank has not received payment for close to a month past the grace period and has filed a Notice of Default with the county.
If a borrower continues to ignore their obligation, lenders may initiate the foreclosure process. This may happen within a few months. Owners may find their home listed for sale by the bank and be told to vacate. Time frames vary significantly but the general rule of thumb is, communicate with the bank when times are tough.
Today, conforming no-point 30-year fixed mortgage rates are averaging 4 percent while 15-year rates are near 3.25 percent.
Do you have a question for Real Estate & Mortgage Analyst Mehran Aram? Submit your queries about a home purchase, refinance, or reverse mortgage via Aramco.Biz, social media (#AramcoReport), or over the phone at (866) 381-8888 and your questions may be featured in an upcoming article.