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There are times when the obligations of a mortgage become more than what borrowers can manage. There are other times when borrowers have multiple mortgages out on the same property. In both of these cases, there are times when mortgage postponement is the best option for both the mortgagee and the borrower. This article details some situations in which postponement of mortgage makes sense. Amansad Financial stands ready to help both lenders and borrowers put together the right postponement of mortgage agreement for both parties.
What is a postponement of mortgage
Foreclosure is an unattractive option for all of the parties involved in a mortgage. For the borrower, of course, if a foreclosure goes through, the end result is similar to a nuclear bomb going off inside his credit report. In addition to the financial ramifications, though, there is the stress that goes along with each stage in the disintegration of the borrower’s life in a number of ways. When people stop making mortgage payments, they usually are also falling behind with their car loans and their credit cards. This means that collectors are constantly calling, and that the threat of having cars repossessed may also be on the borrower’s mind. Finding another way to resolve the crisis with the mortgage can relieve at least one source of stress. For the mortgagee, though, foreclosure is also an unattractive path. If you listen to the news reports, you might think that the banks represent heartless interests who are only too quick to kick borrowers out of their homes after the first missed payment. While there are some disreputable lending institutions, the truth is that if you maintain regular contact with your lender, you are much more likely to avoid foreclosure proceedings if you stick to the agreement that you make. This is because foreclosure is a lengthy, costly legal proceeding for the lender to endure. It’s much better for the lender to set up alternative arrangements with you, because the lender is more likely to get money rolling back in without having to pay attorney’s fees or go through the logistical hassle of getting you out of the house and preparing the house for sale at a reduced foreclosure price. In this instance, a mortgage postponement can take the form of replacing an existing mortgage with a later mortgage. Basically, you’re drawing up your loan again with your lender and moving the due dates back. Your interest costs go up, and there may be a new origination fee that you roll into the loan, but as long as you keep up with these new terms, you protect your credit score, you stay in your home, and you avoid the stress of foreclosure proceedings.
Postponement of Mortgage
Another situation in which mortgage postponement is a possibility occurs when you take out more than one mortgage on the same property. Perhaps you took out a mortgage when you bought the property and spent some years building up equity. However, after that time went by, you realized that you needed to make some major renovations to the place, such as foundation repairs or significant structural work. You didn’t have the funds on hand, so you took out an equity loan, or a second mortgage, on the property.
Postponement of mortgage definition
A postponement or mortgage agreement involves the willingness of a mortgagee to stay in subsequent priority, even if you have to reorganize the first mortgage. Let’s say that Mortgage A allowed you to buy the home in the first place. Ten years later, you take out Mortgage B to use some equity, either to put in some foundation piers or to take your wife to Tahiti. Later, you fall behind on Mortgage A and end up pursuing a postponement. Technically, Mortgage B would move into first priority, because it is the senior debt on the property. A mortgage postponement agreement with the mortgagee of Mortgage B keeps it in second position, even though it would be older than the new Mortgage A. Having an agreement like this in place makes it much more likely that you will get approval for the new Mortgage A reorganization. In situations where a postponement is necessary to get you caught up, this sort of agreement is vital.
Understanding how postponement of mortgage can work can be a lifesaver when it comes to preserving your credit and staying in your home.
Contact a professional at Amansad Financial to find out how we can help you get the mortgage postponement process started.
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