Foreclosure happens when a homeowner fails to pay their mortgage. It is a legal process by which the lender attempts to recover the loan the borrower owes them if the borrower has stopped making their payments to the lender. In this scenario, your house will be used as the asset to pay off your debt. You will be asked to move out of your house.
If the house is worth less than the amount you owe the lender, a deficiency judgment will be passed against you. In this case, you will be asked to pay additional money to your lender on top of having lost your home. The first step to avoid finding yourself in such a fix is not to ignore the problem. Review your spending and cut down on all optional expenses. If you have any assets such as an expensive ornament, a second car or jewelry that can be sold for cash, you may use those assets to pay your mortgage and keep your house.
If you are falling behind on your mortgage payments, you should contact your lender at the earliest and discuss your options. Do not ignore correspondences from your lender as they will often include measures you can take to meet your payments and warnings of not doing so in time. Being aware is always better. You should also review your loan documents and learn about your mortgage rights in accordance with your state laws.
If you find yourself in a financial fix and have been unable to pay your debts, you should ask for help. An attorney, an H.U.D. approved housing counselor, or a real estate expert can give you professional advice on how to manage your finances, understand the foreclosure laws and negotiate with your lender to get yourself out of this predicament.