Every year, hundreds of thousands of people across the United States fall into foreclosure, no longer able to pay back the mortgages on their homes. This sadly common phenomenon often leaves people struggling to find living accommodations, and causes them to lose what is often their most valuable asset. But why do people fall into foreclosure in the first place?

  1. Sudden unemployment
    • One of the most common reasons that people fall into foreclosure is that they, or their spouse, suddenly lose their jobs. A mortgage that may have seemed feasible when they had their job can become unmanageable when they are unemployed. If they are unable to find a new job with similar income soon, they may find themselves falling behind on their mortgage, putting them at risk of foreclosure.
  2. Unexpected bills
    • Of course, mortgage payments are hardly the only expenses that people need to worry about. Sudden medical expenses or repair bills can take someone who is otherwise financially stable and throw their lives into chaos. When someone’s debts start to become overwhelming, it may become impossible for them to keep up with their mortgage, leading to foreclosure.
  3. Divorce
    • Divorces are always complicated, and almost always costly. Even if a divorcing spouse manages to keep possession of the family home, they may no longer be able to afford it without the additional income of their ex-spouse. As a result, foreclosure becomes an almost inevitable result of many divorces, as divorcees struggle with unmanageable mortgage payments.
  4. Increasing interest rates
    • Another important factor in many foreclosure cases is increasing interest rates. While many mortgages have locked-in interest rates from the beginning that do not change over time, other mortgages have adjustable rates that can go up when the mortgage lender requires it. Even small increases in a mortgagee’s interest rate can add hundreds or thousands of dollars to their payments, making them unaffordable and forcing them into foreclosure.
  5. Declining equity
    • The prices of real estate naturally increase and decrease over time, due to market fluctuations. This may not seem to matter much for current homeowners, but if the value of your house has gone down compared to when you first bought it, that can make it have “negative equity.” This, in turn, can make it much harder to refinance an unfavorable mortgage, increasing the likelihood of foreclosure.

    At David J. Lorber & Associates, PLLC, we assist clients throughout New York who are at risk of losing their homes to foreclosure. We will explain your options and guide you in making the best decision for your circumstances. Call us at (631) 750-0900 or contact us online to schedule your Free consultation at our Setauket office.

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