If I’m current on my mortgage but am ready to default on my home equity loan,what will happen to my home?

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I currently owe 60000.00 on my original mortgage loan and 25000.00 on my home equity loan the 2 are from different financial institutions.My home was used of course as collateral for the equity loan,what happens to my house if im current on the mortgage but maybe defaulting soon on the equity loan???

3 Comments
  1. Reply
    BLCOHEN529
    January 23, 2011 at 7:28 am

    Contrary to the prior answer who properly suggested that you take all “free” advice as being valued at the exact price you have paid ($ 0), this is not brain surgery.

    A home equity loan is just another expression for another mortgage/trust deed against the property.

    Go into default and the lender will initiate foreclosure proceedings. Like any other foreclosure you may want to renegotiate your “Home Equity Loan” Depending upon your real estate market and local prices, your bank might want to cooperated.

    Check with your local state law regarding potential deficiency judgments. This loan was not a purchase money loan (i.e. it was not money given to you at the time of property purchase used to complete the purchase)

    This matter in somes states an not in others. Also the means of foreclosure may have a bearing on the rights to a deficiency judgment.

    If a deficiency judgment is likely, consider asking the financial institution to take back a “Deed in lieu of Foreclosure”

    Many realtors will have the easy answer to this. You might even go to a local book store. This is not complicated and even the financial institution might provide you credible information.

    Good Luck

  2. Reply
    Las Vegas Realtor
    January 23, 2011 at 8:11 am

    The home equity loan or 2nd mortgage can initiate a foreclosure and you could lose your home.

    Some options are:

    1. try to refinance
    2. sell your home – if there would not be enough from the sale to pay back the loans, you should find a Realtor experienced in short sales
    3. some people rent out a room for extra income to help get through difficult financial times

  3. Reply
    doinou
    January 23, 2011 at 8:40 am

    They can and probably will foreclose. That’s why your home is the security for the loan.

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