The circumstances which can lead to mortgage payment default are many; Some within a homeowner s ability to control and others are not. In cases where events are beyond a homeowner s control, mortgage holders have been known to offer assistance by providing a grace period or a temporary reduction in payment until circumstances improve, and some semblance of normalcy is restored to a point where the home owner can resume regular payments.
Events which qualify for this type of lender assistance may be illness, death in the family, divorce, and in some cases, unemployment. In rare cases, such as a recession or governmental order, mortgage holders have provided similar assistance to their mortgage customers. However, when a default occurs which could have been prevented, there is little help or sympathy from the lender or anyone else for that matter because the proper steps to such prevention were not taken by the home owner.
At the moment when the decision is made to purchase a home, several questions may enter the thoughts of the decision maker(s), and conversation topics probably range from affordability to property type and neighborhood. Generally, prospective home buyers are able to determine how much they can afford to pay for monthly housing expenses, so the affordability factor is usually not an issue; and invariably they would have already decided on what type of home is suitable enough to meet their family s needs, as well as where that home should be located.
Once an offer is accepted, home buyers will sometimes insist on a professional engineers report, or in the very least, a professional property inspector s report so that they will have a complete understanding of the property s physical condition.
Obtaining one of these reports (more home buyers opt for the inspection report based on cost, but the professional engineer prepares a more comprehensive report which is justifiably more expensive) apprise a home buyer of any physical defects in the home and based on my experience in the real estate and mortgage fields that s the extent to which many buyers have been prepared go with regard to completing any needed repairs recommended in the property inspection report.
Most homes are sold in as is condition subject to normal wear and tear, so most home sellers would usually refuse to complete such repairs. I must point out here that repairs recommended by a professional engineer or home inspector may not be the same as any repair work or improvements required by a HUD appraiser.
Barring a discovery of glaring defects in the property condition, many transactions proceeded to closing with those recommended repairs undone because most of the buyer s savings went toward down payment and closing costs necessary to complete the purchase. Today s buyers have an option.
It is at this juncture in the transaction (between the accepted offer and contract signing) when every home buyer should make a decision to grasp control of a circumstance which have caused many a home owner to unwittingly default on mortgage payments.
Unexpected repair of major working components in a home heating/air conditioning systems, plumbing and electrical components, among others have been known to create havoc with a family s budget, and as a result, have lead to delinquency in mortgage payments. This is the kind of controllable circumstance to which I referred earlier.
Home buyers can control the occurrence of unexpected repairs to the home they are purchasing by utilizing a special government program which is available to them at the time of purchase. I said special because it provides the home buyer with a uniquely affordable method to eliminate potential budget shattering, unexpected major repairs far in advance of when such repairs are likely to occur.
The HUD Section 203k rehabilitation loan helps home buyers accomplish this forward thinking, smart method of home buying. This loan program provides financing for needed home repair/rehabilitation in amounts ranging from five thousand dollars ($5,000) up to the maximum of 96.5 of the combined home price and repair costs (Total Acquisition Cost).
Repair costs are incorporated into the purchase money mortgage based on required general contractor estimates and HUD consultant work write ups which are also a HUD requirement. The loan closes, at which time that amount is placed in an escrow account; home sellers receive their net sale proceeds; home buyers receive title to their new home; and repair work begins within thirty days of closing.
The buyer is now assured that all repair work outlined in the HUD consultant s work write up will be completed in a workman like manner, is being paid for without the prospect of huge chunks taken from the housing expense budget, and the threat of an unpleasant circumstance which could otherwise create mortgage payment default has been eliminated. It is a controllable which could be controlled by forward thinking home buyers who utilize the 203k program to finance their purchases.
Author Resource:
Hi, I'm Tony TPJaveton Phillips I write about HUD/FHA mortgage programs. These mortgages finance owner-occupied primary residences. The 203k mortgage loan provides financing for some mixed-used properties as well. Visit http://www.borrower-friendlyloans.com and http://businesses4us.blogspot.com
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