When you buy a property on a mortgage in Arizona, the lender expects you to pay back the cash you borrowed as agreed. Unfortunately, things may not end up as you expected, and you will be behind on mortgage payments. This may subject you as the property owner to various undesirable consequences, such as losing the property and denting your credit score. In addition, getting fast home offers can be difficult, especially if the house is on the mortgage. However, selling a house in phoenix does not have to be such a hassle. You can sell the property to a cash buyer like Ez Max Offer. We buy houses in Arizona and its surrounding in cash, which can help you pay the remaining mortgage. There are several advantages of selling the property to cash buyers, including:
- Buys houses as is in any condition
- No service fees, no closing cost, no commission cost
- ZERO obligation
- Can get your cash in hand within a week
- Get a quote in 24-48 hours
- No excessive paperwork
- No expensive inspections or fees
- No repairs or renovations are needed
Cons Of Being Behind On Mortgage Payments?
Penalties
Defaulting on a mortgage can lead to financial penalties from the lender, such as late fees, interest, or other charges. Aside from that, whatever money the lender spends trying to recoup the debt can be charged to your account. If the lender hires a lawyer or a group agency, you must pay them. Defaulting on a mortgage loan raises the outstanding balance.
Foreclosure
According to the state’s laws, mortgage lenders in California must first pursue their lien under the trust deed before pursuing you personally on the promissory note. As a result, the lender will repossess your home. Five months into the foreclosure process, your home is put up for auction by the lender, who will then sell it at a public auction. The lender will use the proceeds of the sale to settle the outstanding balance of your loan, including any default penalties that may have accrued.
Deficiency
Deficit judgments represent the difference between the amount owed on a home’s mortgage and the sale price the property is being foreclosed on. In the case of a $400,000 mortgage and a $350,000 sale price, the lender has a $50,000 shortfall, which is known as a deficit. Legally, a deficit judgment cannot be issued against a delinquent borrower in California. Foreclosure of your principal house in California is not grounds for pursuing you for a deficiency judgment, which is allowed in other states. However, if your investment property goes into foreclosure, the lender has the right to sue you for the unpaid debt.
Loss of financial stability
Whether the foreclosure results from a strategic default or other circumstances, it negatively influences a person’s credit history. A foreclosure is recorded on a person’s credit report for seven years, after which time its impact diminishes. Having a bad credit score makes it more challenging to obtain credit cards or vehicle loans, and you’ll end up paying more in terms of interest and other fees as a result. Rebuilding your credit can take years, but you can do it by making on-time payments on your bills.
Insufficient Funds To Repay An Existing Loan
As a result of an involuntary foreclosure, you may have difficulty getting a new mortgage in the future. If you defaulted on your first loan, a new lender’s risk department would also doubt your capacity to repay a second one.
There are, of the lesson, anomalies to any rule. To get a new conventional mortgage from Fannie Mae, you often must wait seven years after a foreclosure. If you can document extenuating circumstances, such as a sudden job loss or significant medical expenses, the waiting duration can be trimmed to three years.
It’s a good idea to start accumulating money for a down payment while you’re waiting to see whether your current mortgage application is accepted. This includes paying all of your other bills on time, finding a job that pays consistently, and saving as much as you can.
Mortgage Payments: A possible tax bill from the Internal Revenue Service
Defaulting on a mortgage might also put a person in a position to face tax consequences. You may not have to pay back the remaining mortgage once the bank forecloses and sells the house. However, you aren’t completely free of responsibility.
