The foreclosure procedures differ from state to state, however there are some commonalities which can be discussed. Foreclosure is the process by which a lender regains ownership of your property after you fail to make payment. This process allows the lender to recoup their loan amount through the sale of your property. One thing to keep in mind is the mortgage company isn’t going to take your home from you as soon as you miss a payment.
Your mortgage contract has typically has a grace period clause built into it giving you 10-15 days to pay past your due date penalty free. After that grace period is up the lender will typically charge you some kind of late charge. Failure to pay by the grace period, in most cases, isn’t going to affect your credit or otherwise negatively affect your finances. If you fail to pay within the first 30 days of your payment due date the delinquency will be reported to credit reporting agencies and the lender will begin to more aggressively try to collect the debt.
Usually around 90-120 days past due the mortgage company will start to consider foreclosure proceedings. This time frame has been stretched out during the current economic situation so it may take longer for your bank to actually start the foreclosure process. When the bank has decided to start the foreclosure process they will issue you a “Demand Letter.” The demand letter will state the amount your are delinquent and advise you you have 30 days to bring your account current or make arrangements to bring your account current. Typically the company will require you to pay it completely current once they have issued the demand letter.
If you fail to make arrangements your account will be handed over to the lenders attorney’s to be processed for foreclosure. Specific laws vary by state but typically they will make arrangements with the sheriff and the county for a foreclosure sale. A notice will be posted on your property and in some cases in the newspaper. Auctions typically occur on the steps of your county courthouse. If you are still living in the home the lender or purchaser will have to go through your states eviction process to have you forcibly removed from the home. Typically a Sheriff’s deputy will come to your door and require you to vacate the premises immediately.
If your home is in the foreclosure process and you manage to bring it current you are going to be liable for the legal fees the bank incurred up to the point where you brought it current. This amount is usually in the thousands of dollars. Their attorney’s have to be paid for the work they did to process the foreclosure and the bank will expect you to pay it. This is a good reason to keep in contact with the bank and make arrangements to avoid the foreclosure process from being started.
A couple of things to keep in mind, the bank DOES NOT want your home back. They don’t want to go through the hassle and pay the legal fees to foreclose and evict you from your home. Your best bet is to keep in constant contact with your mortgage company and keep the apprised of your current situation. There is a house across the street from me that has been vacant now for over a year. The owner has not made any payments during that time and the house still has not been foreclosed on. My second point is to not move out of the house until you are forced to move out. If the guy across the street from me was living in the home all this time he would have been able to live and just be paying utilities.
Additional References on Foreclosure
Foreclosure Law by State (http://www.foreclosurelaw.org/ )
Housing and Urban Development (http://www.hud.gov/foreclosure/index.cfm)
Photo: (Doc1)
You have home insurance to cover the costs you may incur in the event something happens to your home. Fire could ravage your home and render it and all the things inside it worthless and in most cases gone completely.
If something like this were to happen to you would your insurance company give you the accurate value for the contents of your home or just what they think you deserve. If someone broke into your house and ran off with your TV would you be able to claim it if the police recovered it? An even better question should be whether or not the insurance coverage you have will even pay enough to replace everything if you knew what you had.
For these reasons it is imperative that you create a home inventory. The home inventory is essentially a listing of everything you own and where possible how much you paid for it. The more detailed information you can provide the better off you are going to be. For the items you can’t find the exact purchase price it helps to have model and serial numbers on record. These details will not only help to determine replacement cost they will also aid you identifying any stolen items from your home.
You can choose to create your inventory based on the category your items are in or the room where the item resides. Either way you want to make a complete listing of the items for future reference. Include the DVD’s the furniture, HDMI cables, etc. Every item of value. Accurately listing out your items ensures you will get appropriate compensation in the unfortunate event it needs to replaced. I would suggest starting by room and listing each and every item you own. If possible take photos of each of the items and include the date of purchase and where it came from. Some typical items, by room, might include:
Living Room
Sofa
Coffee Table
End Table
Lamps
Panasonic 52″ TV Serial XFDET3 HDTV
Dining Room
Grandma’s Fine China (Photo’s)
Dining Table
Eight Chairs
China Cabinet
Buffet Table
Kitchen
Anyway you get the idea. The key here is to make your inventory complete and include as much information about each of the items as you can. If your desk is made of exotic zebra wood make sure you include that tidbit of information. I can assure you that desk would cost a lot more than the one I am using right now.
There are plenty of options for entering and maintaining your home inventory. One of the simplest, and most affordable, options is to utilize a simple spreadsheet and digital photgraphs. There is also an abundance of home inventory software on the market. Quicken offers a Home Inventory Manager which will set you back around $30. Whether you choose to purchase home inventory software, or utilize some of the free home inventory software options like Know Your Stuff from the Insurance Information Institute the most important thing is to store your inventory off site. If you happen to be an iPhone owner there is an iPhone App I reviewed called Home Inventory you could utilize as well.
Maintaining a perfect inventory of your belongings won’t do you any good if it is in the filing cabinet or on the hard drive of a computer that were in the home that was just destroyed.
Get out there and get inventorying.
Purchasing a home is one of the most rewarding times in many people’s lives. It can also be one of the most stressfull. The build up to buying a house is huge, you have to scrape and save to get the money together for the down payment. The search then starts for the best rates on your impending mortgage and figuring out what you will qualify for. Then you enter the hunt for the perfect house, the home to meet all of your wants and needs. Buying my first place was probably the proudest moment, aside from the birth of my sons, in my entire life. I had achieved something no other child in my family had, I bought a house. At the age of 23 I was now a home owner to say it was amazing was an understatement.
Once I closed escrow and took ownership the fun started. You move in and start to arrange furniture the way you want and get things situated exactly right. Then once the couch is perfectly positioned you go to plug in the cable box only to realize there isn’t a cable, there is no wall plate, and all you have is black box that flickers. This is when the sleeper costs start to really add up. Something has to be done to get your perfect TV, in the perfect place, in your perfect house. Guess what that is going to cost you money. If you do it it won’t be that bad but to pay the Crapcast guy to do it you are out like $100. This is just an example of the sleeper costs that you don’t think about or take into consideration before you buy a home, here are a few more.
- Cable/Phone Installation – If you are buying a new home you are going to have to pay to have the cable hookup’s initially run from the street to your home. They generally don’t wave this fee, even if they will wave other installation fees. The fact is the cables aren’t buried to your house, just out by the street. In some cases they have to hire a contractor to bore under the road to your yard, that costs them and they pass it on to you. Used homes can sometimes get away without it as it is already “connected”.
- Utility Connect Fees – Similar to cable if the home has never had electric, gas, or water service you may have to pay an initial connect fee. The same fee applies if you fail to transfer over utilities from a previous owner. Make sure you coordinate with the sellers so utility responsibility transfers on the day you close escrow so you avoid unnecessary fees.
- Home Owners Associations – Commonly referred to as the busy body club, the HOA is usually responsible for upkeep of the neighborhood entrance and generally causing disdain amongst neighbors. Hopefully you were made aware of any HOA fees prior to purchasing your home. In some unfinished developments there may not be a fee until the developer actually completes the hood and turns it over. Watch out for situations like this because they could cost you in the end.
- Paint – My first house was 1100 sq ft. I think it took me all of 3 gallons of paint to make it my own. That was a lot more than I expected. My current house is 3044 sq ft. and painting it is going to bankrupt me. Paint ain’t cheap and don’t pretend it is. If you get the cheap stuff it will probably take you ten times the coats to make it look decent and it will even out with the expensive stuff. Builder beige is only good for so long.
- Landscaping – The Jones’ are some mean SOB’s. Their lawn is always greener, their bushes are always thicker, and their flowers are always prettier. Keeping your yard from looking like that creepy house from The Burbs costs cash. You are going to need at least three things; a lawn mower, a weed eater, and a blower. Without these essential lawn maintenance tools you will quickly be known as “that guy.”
- Utility Bills – The amount you are going to spend on utilities is directly proportionate to the age and size of the home you are buying. The older and bigger the home the more it is going to cost you to heat and cool it. Don’t discount the number of people who are showering either. All of these factors contribute to higher utility bills. If you can I would ask to see a sample utility bill for the home you are purchasing.
- Tax Increases – The amount you pay into escrow correlates to the amount of taxes and insurance you are required to pay on your home. If the taxes on your property haven’t been reassessed in several years you can almost count on the county/city coming out and doing an assessment. They generally disregard the actual real estate market so you can expect your property taxes to go up.
- Air Filters – No one ever thinks about an air filter when they are buying a house but these things can be pretty damn expensive. Both my oldest son and I have sensitive allergies and require pretty clean indoor air. What this means is we have to be diligent about replacing our furnaces’ air filters regularly. When we replace them we use high quality low allergen filters. These things are freaking expensive, I am talking around $20+ a piece and I need three.
- Light Bulbs – Yes I really said light bulbs. It would seem there are thousands of these things in my home and they were forever burning out. We have since replaced most of the incandescent bulbs with flourescent. The rule of thumb is that if it is a oddly shaped expensive bulb it lasts 1/1000th the time as a regular 60 watt bulb. In my house this stands for any bulb that requires an extension ladder to change.
