Homeowner Frequently Asked Questions

Foreclosure is the legal process by which a borrower in default under a mortgage is deprived of their interest in the mortgaged property. This usually involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mortgage debt.

Learn more about foreclosure and how to avoid it.

When a homeowner does not make payments on a mortgage loan, the mortgage servicer can begin preparing the default notice — the first step in the foreclosure process — as early as 60 days after the first missed payment. The specific processes and timing of a foreclosure vary by state, depending on local laws and other factors.

Learn more about foreclosure and how to avoid it.

REO (real estate-owned) properties are those that have been foreclosed upon and are available for purchase directly from the lender — often because they did not sell to a third party at foreclosure auction.

Search for REO properties in your area.

A deed-in-lieu of foreclosure, also known as a Mortgage Release™, allows you to voluntarily transfer ownership of your home to your mortgage company and possibly be released  from any further payments or financial responsibility for the mortgage loan. You don’t need to be in foreclosure to pursue a deed-in-lieu of foreclosure, but — depending on your situation — you may be required to make a financial contribution to receive the release.

Learn more about foreclosure and how to avoid it.

A forbearance plan is an agreement between a borrower facing a temporary financial hardship and the mortgage company in which monthly payments are reduced or suspended for a certain period of time. After that period, the homeowner must bring the mortgage loan up to date or otherwise resolve the delinquency.

Learn more about forbearance.

If you qualify for a forbearance plan, you and your mortgage servicer will agree on the length of the forbearance period, the reduced payment amount or terms of a payment suspension, and the terms of repayment. Then, about 30 days before your forbearance plan is scheduled to end, the servicer will contact you to determine the best plan to repay the amount you owe.

If you continue to experience a financial hardship at the end of your forbearance plan, talk to your mortgage servicer about your options.

Learn more about forbearance.

A short sale, also known as a pre-foreclosure sale, is when you sell your home for less than the total debt remaining on your mortgage.

Learn more about short sales.

A reverse mortgage is a loan option that allows homeowners 62 or older to get money by borrowing against the value of the home.

Learn more about reverse mortgages.

Home mortgage refinancing means taking out a new loan to pay off your existing mortgage. This is often done to gain more favorable loan terms, like a lower interest rate or lower monthly payment. Like your original mortgage, refinancing requires lender approval and has costs associated with the application and closing processes.

Learn more about refinancing and why you might consider it.

Some mortgages allow a “cash-out” refinance, which lets you use some of your home equity to borrow cash or pay off high-cost debt. The money taken out is added to the total balance of your mortgage loan. This can reduce the amount of equity in your home, add to the time it takes to pay off your mortgage, and ultimately require you to pay more total interest.

Learn more about cash-out refinancing and what to consider before applying.

Refinancing closing costs are typically 1% to 2% of the total loan amount.

Estimate refinancing closing costs with our mortgage refinance calculator.

There is no limit to the number of times you can refinance your home, but there may be required waiting periods for certain lenders or loan types. It’s also important to remember that each refinance requires the associated costs of a new loan.

Learn more about refinancing and why you might consider it.

When your mortgage loan balance reaches 78% of the original value of the property on the scheduled termination date, private mortgage insurance (PMI) may be automatically removed from your monthly payment. You can potentially avoid paying more than necessary by contacting your mortgage servicer when your loan balance reaches 80% of the original value and requesting termination . You may also be eligible to terminate mortgage insurance if the market value of your home has increased due to market appreciation or if you have made substantial improvements to your home. Contact your loan servicer to discuss the qualifications and process by which PMI may be terminated.

Learn more about how PMI works.

Hazard insurance, also known as homeowners insurance, is the insurance carried on the property to cover financial losses in the event of covered property damage or total loss. A full year’s premium is usually paid at closing. Following closing, the servicer may collect funds for insurance in the escrow portion of your monthly mortgage payment.

Learn more about insurance for your home.

An escrow balance is the amount remaining in the escrow account being held by the servicer as of the last borrower payment.

Learn more about escrow.

The escrow portion of your monthly mortgage payment goes into an escrow account for property taxes, homeowners insurance, and private mortgage insurance (if applicable). Because these costs can vary from year to year, your escrow portion and overall mortgage payment may change accordingly.

Learn more about escrow.

Damage and loss caused by flooding is not typically covered by regular homeowners insurance. Flood insurance can be purchased to cover the building itself - including electrical and plumbing systems and other permanently installed features - and your belongings, such as clothing, furniture, and electronics.

Learn more about flood insurance.

If your home is in a Special Flood Hazard Area (SFHA) and your loan is backed by certain designated entities like Fannie Mae or FHA, you will be required to have flood insurance. But floods can happen anywhere, so even if flood insurance isn't required for your home, consider whether it may be a worthwhile option for you.

Learn more about flood insurance.