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:
- Feeling of emptiness (in your wallet)
- 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.