4 Things to Consider if You are Behind on Your Mortgage

Monday, December 11, 2017, 6:00 AM | Leave Comment

The thought of losing a home to foreclosure can be scary for any homeowner. Millions of families are still dealing with the consequences of the recent recession, while others can fall behind on payments due to job loss or major medical bills.

If you fall behind on your mortgage, preventing foreclosure should be your priority.

Here are five things to consider if your family has fallen behind on mortgage payments.

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  1. Contact Your Lender

    It may be tempting to avoid contact with your lender due to fear or embarrassment. However, you want to reach out to them as soon as possible to see what options for available you.

    You generally have somewhere between 90 and 120 days from your first missed payment before foreclosure proceedings begin. If you wait too long, your lender may not be as willing to work with you.

  2. Consider a Forbearance or Repayment Plan

    If your financial woes are temporary, maybe due to unexpected medical costs or unemployment, your lender may agree to terms that help you catch up on payments you’ve missed.

    With forbearance, your mortgage payments are reduced or suspended for an agreed-upon length of time. You then make up the missed payments with a lump sum payment or smaller partial payments over several months.

    With a repayment plan, you’ll pay your regular payment plus extra for several months until you make up the missed payments. These options usually aren’t helpful if you regularly can’t afford your mortgage payments.

  3. Modify Your Loan

    Your lender may agree to permanently adjust the terms of your loan by lowering your interest rate or extending your payment term. You typically have to meet certain criteria, such as financial hardship.

    A loan modification may require underwriting, but it should be quick and easy since your lender already has your information.

    Because foreclosure hurts more than just you, there are additional options for modifying your loan.

    According to Dickson Frolich, the Homeowner Affordability and Stability Plan is one of the biggest programs for loan modification, and it aims at helping people who owe more than their home is worth.

  4. Sell Your Home

    Is the real estate market in your area hot? Then selling your home could be an option. You could raise enough cash to pay off your mortgage in full, which would protect your credit.

    However, if you have already entered into the foreclosure process, this option gets more complicated. You will need to get approval from your lender to proceed with a short sale, and you will be responsible for any balance on your loan that the short sale doesn’t cover.

If you’re behind on mortgage payments, you are not alone. Reach out to your lender as soon as possible, and you may find there are plenty of options to help you prevent foreclosure. They want your money, not your home, so don’t give up.

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