- January 2, 2015
- Thomas Adam
- Foreclosures
There are many possible defenses to foreclosure in Florida and we’ve discussed a number of them in previous blog posts. Today, we’ll discuss the best defenses to foreclosure in Florida and possibly avoiding it altogether. The following are a few tips to keep in mind when purchasing and financing your home. They are simple but effective.
(1) Buy Less Than You Can Afford
Purchasing a home under your budget gives you some wiggle room should your financial situation change for the worse. Place the savings into a low-risk, fairly liquid investment so that they’re available if you need to tap into them. Financial set-backs like lay-offs and divorce are often temporary but while they exist your risk of going to foreclosure is greatly increased. Having extra savings to fall back on during tough times can make the difference between keeping your home and going into foreclosure.
(2) Read Your Loan Documents
Yes, we know how long and boring the documents surrounding your home loan are, but when you accept a loan you are entering into a legal binding contract to repay money, both you and your lender are undertaking legal obligations. It’s a serious undertaking. The more you know about your obligations, the less likely you are to enter into a loan that is riskier than you want. The more you understand about your lenders obligations, the better your bargaining position will be if you become at risk of foreclosure. If you cannot or don’t want to dedicate the time to reading through your mortgage and loan documents, have an attorney read and explain them for you. A small cost upfront pays off in the long run.
(3) Think Twice Before Taking Out a Home Equity Loan
Home equity loans or second mortgages are homeowner loans where the equity in the home serves as collateral. For many, they are an unparalleled means of financing home improvements and consolidating debt. However, they are not without risks and caution should be exercised before entering into one. A $50k home equity loan should be viewed just as any other loan of that amount, perhaps even riskier because in most situations, failure to pay allows the lender to foreclose on the home and pursue the homeowner/borrower for any difference. Additionally, as seen in 2008, home prices can change quickly and drastically meaning the equity that served as collateral when the loan was entered into may not always exist if and when it becomes necessary to pay off the loan. Finally, borrowers tend to exercise less caution in entering into home equity loans than they do in entering into their first mortgage and the interest rates on home equity loans can be much higher. Again, under the right circumstances home equity loans can be a fantastic financial tool, but they should be entered into cautiously to avoid a downward financial spiral that can lead to foreclosure and even bankruptcy.
Already Facing Foreclosure?
We understand that life is unexpected and even those who follow the best practices when it comes to buying and financing a home sometimes find themselves behind on payments and at risk of foreclosure. The Jacksonville foreclosure defense attorneys at Adam Law Group are here to help with defenses to foreclosure in Florida. Contact us today to discuss the options available to you.