Signing mortgage documents and getting the keys to your new home is a major accomplishment. Maybe you took a second job or cut extra spending in order to save cash for your down payment and closing costs. And if you had a low FICO score, you may have employed every credit trick in the book to raise your personal rating and qualify for a mortgage.
However, closing on your mortgage and moving into your new home doesn’t guarantee stability. Personal finances can change in the blink of an eye, and it only takes one major life event to create mortgage payment problems. You might deal with a job layoff, develop an illness, go through a divorce or suffer an injury that prevents work. Regardless of the circumstances surrounding your situation, if you fall behind on your mortgage payment, expect your lender to come knocking.
There are, however, ways to avoid a foreclosure, and many distressed homeowners speak with their lenders about short selling. The consequences of a short sale are less severe than a foreclosure. Nonetheless, there are consequences, and these often deal with credit scores and the ability to qualify for home loans in the future.