Great news! It seems like Americans have learned the lesson for the recent Financial Crisis. After a decade, mortgage delinquency rates still remain very low. Early this year, a data analysis showed that only 5 percent of homeowners were behind their mortgage payments by 30 days or more.
Being delinquent is defined as not being able to do payments by the due date. A loan remains delinquent until the payment(s) have been made. When mortgage payments have been delinquent for extended periods, the loan has reached a default. A notice of default will be issued after the fourth missed a monthly payment. By this time, the official foreclosure process also begins.
Here are some steps you can take in case of a delinquency or the avoidance thereof:
Understand Why and What You are Borrowing
Know what kind of mortgage loan you have and why you chose such mortgage. Your financial situation and your need will dictate how much money you need to borrow. However, you should be able to distinguish the ‘want’ from the ‘need’. Failure to do so may end up having more debts to pay than necessary.
Managing your debts
Debts enable us to make needed purchases that we may not otherwise afford if we rely solely on our income. Not abusing this means managing your debts by setting out a budget. Determine how much you really need to borrow. Do not apply for loans until you know you need them. Take a loan that is the least amount you need, borrow only what is necessary.
Keep Track of your Loans
Keep track of all your borrowings. You need to know what your loans are and how much money goes to each. Also, you need to find out with one has more interest and which one is dwindling your finances out. If you have all this information, it would be easier for you to devise a plan of action. Whatever the strategy, the common goal is to be able to pay your debts constantly.
These three steps should be basic when you plan on getting a mortgage loan or if you already have one. Remembering this by heart will make it easier to avoid delinquencies. Keep in touch with your loan provider and keep yourself informed of opportunities to lower your payments.