If you are behind on your payments, but plan on receiving a lump sum of money from a settlement or other source, you can catch up your past-due amount and bring your account current. This will reinstate your loan. The amount of penalties, late charges and other fees will depend on how far behind you are on your payments. If your home is more than 90 days past due anticipate adding about 1% or more of your mortgage balance as the result of late fees, penalties, attorney fees, appraisal fees, among other expenses.
For example, if you are six months behind and your mortgage payments (principle and interest) are $2000 you will be required to pay $12,000 plus miscellaneous fees. If your mortgage balance is $300,000, your late fees, legal fees and other fees will likely total 1% of your mortgage balance, or an additional $3,000 for a total repayment of $19,000.
Often your lender will allow you to roll the additional fees into the backend of your loan. Instead of a mortgage balance of $300,000, your new balance will be $303,000, using the above scenario. If they agree to such terms, and you can fulfill them, your loan will have been reinstated and your initial loan terms take effect.
If you chose this option, make sure your future projected income will cover your current payment a potential increased payment if your loan has an adjustable rate. You do not want to pay all this money out only to find yourself facing foreclosure again at a future date.
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The information contained in this report is deemed to be accurate but is not guaranteed.
Sources: "The Foreclosure Bible" and the California Association of Realtors®