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It has finally happened; you have qualified for a mortgage and now you own your home. Owning a home can be great, but it is now more important than ever to understand foreclosure and what some of the terms are related to foreclosure so you can hopefully avoid it.

Foreclosures can seem complicated since there are so many different terms associated with them. Real estate agents and loan officers might know these terms like the back of their hands, but to the rest of us, it would be easy to get confused when terms start to be used.

Lien holder is another term important to understand as it relates to foreclosure. The lender, usually a bank or credit union, gives you money to finance your purchase of the home. This means there is a lien on the home. In truth, the lien holder has the power to take back the home, or foreclose on it, if you don’t keep your contractual obligations.

Acceleration or acceleration clause is also an important term to know. Most mortgage terms contain an acceleration clause these days. This is what allows the lien holder to declare the entire amount of the home as debt owed and not just the amount you have defaulted on paying.

If you are behind on payments, and there is an acceleration clause in your mortgage, the lien holder can decide to accelerate your mortgage and require you pay the full amount or the home will be foreclosed. If there weren’t an acceleration clause, technically if you failed to make payments, the mortgage holder could really only hold you accountable for what you haven’t paid, not the full amount you owe on the home. They would have to wait until payments became due.

Default is another term often associated with foreclosure. Default refers to the lack of payments on time and in full to the mortgage. This means that the borrower failed to stick to the terms and conditions of the loan and therefore defaulted on their payments and the loan. Default often leads to foreclosure of the home.

Even though foreclosure can seem like a tedious concept to understand, knowing these terms will help you navigate your way through and hopefully even avoid foreclosure. Understanding the terms will help you be able to communicate better with your lien holder so you feel like you are not left in the dark.

Gone are the days of low documentation home loans. Getting a home loan today requires a lot of documentation. And if you are prepared, it will make the process a lot smoother

Reviewing your current credit. The number one place to begin in preparation for an FHA home loan is to take a look at your credit score and past credit. You will need to get your hands on a recent credit report. You will want a report that contains data from all 3 credit reporting agencies. You can ask the lender you are dealing with to check your credit or your can go to the credit reporting agency web sites.

Make sure you go through your credit score with a fine tooth comb to make sure everything on your report is accurate. For more information on credit tips visit my article at www.socalfhahomeloans.com. Generally you’ll need a 620 or above credit score to get the better FHA interest rates. Although you still can get an FHA loan with a score below 620.

FHA required Job History: Generally, FHA loan underwriters are looking for a 24 month job history to qualify. But there can be many exceptions to this. Gaps in employment are allowed if you have a good explanation (attending school, laid off, sabbatical, etc…). There also has to be an explanation if chaging careers within the 24 month job history.

FHA required Income Documentation for W-2 wage earners. If you are a W-2 wage earner, next you will want to gather your last months paystubs and last 2 years of W-2′. If you recieve a bonus as part of your income, the lender will require a 24 month history of that bonus in order to count that as part of your income. The lender verify’s your bonus history by send a “verification of employment (VOE)” form to your employer who will fill out details on your pay. Additionally, if you are paid hourly and your hours fluctuate or recieve overtime pay, the underwriter will also require a VOE and they may take an average of your monthly income over a longer period.

FHA Down Payment and Cash Reserves Documentation. FHA requires that you document the source of your down payment and your cash reserves you will have after closing on the house. As a note, FHA does not require you have cash reserves after closing, but it can help as a compensating factor if you are on the borderline of qualifying. To document the down payment and cash reserves, FHA will require your last 2 months of bank statments all pages. Or if a retirement account, your last 2 mos or quarterly retirement statement all pages. FHA allows you to recieve a gift for ALL of the down payment. If you are recieving a gift, you must have a gift letter (which your loan officer will supply), bank statements from the gift donar showing the source of the gift and evidence the gift was transfered to you.

If your last 2 months bank statements that you supply show any large deposits, the FHA lender will want you to explain where the deposits came from.

Getting a home loan today requires detailed credit, income and cash reserve/down payment documentation. It is in your favor to be very organized and prepared to deliver your loan officer the documentation discussed in this article. Make you have this documentation ready and get it quickly to your loan officer. And make sure nothing is missing, there can’t be one page missing and everything has to be clearly readable. This ensure a very successful loan closing and minimize frustration.

In 2008, millions of unsuspecting homeowners received a pre-foreclosure notice. Most of these people did not take the simple actions required to stop the foreclosure and they lost it all. It’s foreseen that another 3 million late payment notices will go out in the next 12-18 months.

Have you received a foreclosure notice due to a financial hardship? Is your mortgage now more than your house is worth? Are you finding it next to impossible to afford your monthly house payments?

If so, the wonderful news is you may be able prevent foreclosure and save your house by filing a loan modification request.

What is a Mortgage Loan Modification?

A mortgage modification is a reworked agreement between you the note holder and lender with revised terms and interest rates. Loan modifications can be the perfect solution to stop foreclosure for home owners who are considering a foreclosure or bankruptcy.

Do You Qualify for a Mortgage Loan Modification?

Perhaps you’ve lost a job, got slammed with an unexpected medical emergency, or your original adjustable rate loan went through the roof so you can no longer afford the monthly bill. You’ve made every effort to pay the bills and save your home from foreclosure, buy you have tragically hit unfortunate economic times and now find yourself late on payments.

A mortgage modification may be the answer!

Every bank has their own loan modification qualification standards. Here are the most common:

* The house is your chief residence

* You have experienced hardship or a change in circumstances

* You’ve missed 2 or 3 payments

* You have not filed bankruptcy

* You are not defaulting to get a loan modification

* You are willing to be open and provide all necessary documentation

If you have not yet missed a monthly payment you may still qualify for a loan modification if you can prove you are on the edge of economic collapse. Meaning, due to circumstances, you will eventually default and miss payments if you don’t get some type of immediate financial relief.

How to Stop Foreclosure Now!