Don’t Default on Your Mortgage

What is a holiday hangover? No, I’m not talking about New Year’s day waking up in the bathroom with the overwhelming smell of wine, champagne, and whiskey from a night of copious drinking with the feeling of weakness. A holiday hangover is the aftermath of the gifts, dinners, champagne, and traveling done on holidays which take a toll on your wallet causing a lot of people to fall behind on mortgage payments, car payments, and any other debts. Some symptoms of the holiday hangover are:

  • Regret
  • Stress
  • Feeling of emptiness (in your wallet)
  • Headaches
  • Buyers’ remorse

Everyone can agree that racking up the bills and spending money is easy; however, that’s when the buyers’ remorse comes around – along with the credit card statements.

It can feel impossible to keep up with all of your bills when circumstances are tight. If you don’t make your monthly mortgage payments, though, you risk going into default and losing your home.

Such incidents are disastrous, but they can be avoided if you know what precautions to take. To safeguard your house and your finances, learn about mortgage defaults, what they entail, and how to avoid them.

What Does It Mean To Be In Default On A Mortgage?

A mortgage default occurs when a borrower fails to make monthly payments on a house loan’s principle or interest. Defaulting on credit cards and school loans, however, is possible. When a borrower skips payments or stops making them altogether, it can have major consequences in the short and long term.

A mortgage default can result in the loss of a borrower’s home as well as damage to their credit score. Defaulting on a loan might raise the borrower’s interest rate on other loans and make it difficult to qualify for a future loan in the long run.

What Causes A Mortgage Default?

Missing monthly payments is the most prevalent cause of home loan default, but it isn’t the only one. Homeowners can also fall behind on their payments if they:

They haven’t paid their property taxes in a long time.

They haven’t paid their homeowner’s insurance in a long time.

Without their lender’s consent, they transfer the title of their home to a new owner.

Their property is severely damaged, and hence its worth will be reduced.

Use their property for unlawful purposes, such as drug dealing.

What Happens If I Fail to Pay My Mortgage?

If you default on your mortgage, you will have the opportunity to repay your loan before your lender takes possession of your home. If you fail to contact your lender, you can expect to go through the stages outlined below.

Your debt is being accelerated by your lender.

Your lender may apply the acceleration clause in your mortgage contract if you are more than 30 days behind on your payments. Your lender can utilize this clause to accelerate the debt and demand that you pay the entire remaining balance of your loan right away. This step makes it easier for your lender to foreclose on your home in the future.

It’s possible that your house will be foreclosed on.

If you don’t have the money to pay your mortgage’s outstanding sum, your lender will foreclose on your home. You’ll have around 120 days before foreclosure proceedings begin, depending on your state’s regulations.

It’s possible that you’ll lose your home.

You’ll be compelled to leave your house if your lender goes through with the foreclosure. Once your lender has custody of your property, they will auction it off to reclaim the monies you were unable to repay.

The key thing you should remember during any holiday is to budget, budget, budget! I’m not saying that you should shop for gifts at the local Dollar World but did you have to spend $1200 on that coat, $700 on a purse, and a $500 pair of high heel shoes especially if you can’t afford them? Some of that money could have gone to your mortgage. Develop a spending plan. Figure out exactly how much money you owe, how much you earn, create a budget, and then determine how much money you have each month to pay down those high-interest debts, such as credit cards and mortgages.

If you’re already feeling the symptoms of the Holiday Hangover, here are a few steps you can take:

Consider any assets you have that you could sell to earn some more cash. Your car could be one source of money if you can live with taking the bus for a while.

Is there anyone that you live with who can work an extra job to bring in more of a total income?

Seek professional advice. Anyone who is licensed, experienced, and ready to help can assist you to get back on the wagon, budget your money and finish your mortgage in Ontario.

Personal loans from family or a friend can help you out a lot to pay off those larger bills like your mortgage. Make sure to make it a written agreement, including any interest rates, and treat it like a loan from the bank.

Re-build your mortgage. By capitalizing on lower interest rates, you may be able to gather up extra cash every month by reducing mortgage payments, but this all depends on getting qualified and how much debt you owe. Always talk to your mortgage lender; you may be surprised with the options available to you! Remember, if you have become ill or lost your job, there may be instances where your mortgage payments may be covered through insurance. Be sure to review all your paper work, where mortgage insurance is concerned.

The only way around debt is to budget. Don’t overspend on the holidays (unless you have the money of course). Before taking any large steps, always consult an expert such as a mortgage broker who can help with rebuilding your mortgage with better terms. Since mortgage brokers are equipped with specialized resources, they can be your best bet in saving on your mortgage.

Have Tenants Pay the Mortgage When Buying Properties

So you’ve started thinking about buying your very first rental property in Ontario.

Look at you go, Mr. Investor!

The problem is that you have not a single clue about what it takes to finance your idea or where to start.

I’ll try my best to answer your problem on the subject, but just remember that this article is a guide only and every mortgage application should be reviewed and assessed separately.

After some time in the real estate market, I’ve realized (and it’s pretty obvious) that real estate can be the biggest investment of your life, you’re spending (a lot of) money on the house after all however, if it works out, you can benefit a lot from it. But what if you didn’t have to pay the mortgage at all? There are ways that you can actually buy a house – without actually paying more than a down payment and a few additional costs for it.

It’s obvious that a house in Ontario still needs a mortgage (unless you’ve got a few hundred grand saved). However, a house can also be used as an investment. The most common way to do this is with a rental property. It’s exactly what it sounds like, a mortgage you take out on a property you want to buy to have tenants renting it. These types of mortgages are calculated differently and interest rates of often slightly higher since it’s a higher risk for the lender than owner-occupied mortgages. But really, you’re not paying the mortgage for the most part so a slight increase in rates won’t do too much.

So you may or may not have already started to look for a property but what exactly are you looking for? When you buy a home as an investment, you want to consider the target market you’re renting it out to.

One of the first things you should consider is the bathroom. It’s one of a home’s biggest assets and should be a high priority in deciding whether or not to buy. If you’re planning to rent to students for example who are on the go, a stand-up shower would probably be favored – less water usage and less time spent showering. However, if you’re renting out to a family, they may want a full bathroom.

The kitchen is another thing to consider. Students or single occupants generally wouldn’t need a large kitchen but a large family would.

After the pre-approval process, you would talk with a mortgage broker to see your available options. Be sure that the option you choose is going to work with your situation since over the length of the mortgage there will be several tenants – some who have more income than others. You also need to have sufficient funds in case a time comes up where there are no tenants and you need to pay from pocket. Once you’ve found a house and have been approved for the mortgage, you would pay the down payment. The down payment is generally around 20% or higher on rental properties. Now it’s all up to you to find tenants so post ads at grocery stores, laundromats, bulletin boards, tell friends, contact colleges and universities! Once you find a tenant, you’ll only generally have to worry about their payments paying off the mortgage, the maintenance, and making sure everything is running smoothly – unless you hire a property manager of course.