Almost everyone has a time in their lives when things don’t go according to plan. Maybe you lose your job, or you have a major illness in your family and your finances take a beating. If this happens to you, and you find yourself getting behind in your mortgage payments there are a few things you can do to ward off the foreclosure on your home.
Of course one thing you can do, is to sell your house. Depending on the market conditions you may even be able to make some money in the deal. If you can’t keep up with the mortgage payments and want to sell your house as a resolution, you need to be realistic about the price it will sell for because time is of the essence. The more months your house is on the market the closer you get to foreclosure and if you wait too long the decision will be out of your hands and the foreclosure auction will be imminent.
Another thing you can do is talk to your lender and see if they can change the terms of the loan. This could work if you only have a temporary setback and you will be able to get back to paying them, or if your income has gone down a little bit and you can still pay a mortgage but not quite at the amount it is now. Banks don’t really want to go through the foreclosure process so, most of the time, they are happy to work with you to come up with terms that you can both live with.
A loan modification could include extending the term of the loan to add on extra payments or to make your payments smaller by adjusting the interest rate or taking some of the equity that you already have and refinancing into a longer mortgage. Of course, if you want your lender to be reasonable about this you need to provide them with proof that you are making good-faith payments and that you will be able to make the new payments given your current finances.
If you’ve missed a couple of payments but are now ready to get back on track, you might be able to have your lender give you a repayment plan where a set amount is added to your normal payment which repays the amount that you are behind, this way the missed payments are spread out over a certain amount of time and you don’t have to come up with a large lump sum of money to become current.
If your income is temporarily reduced you might be able to have your mortgage payments suspended for some amount of time. After the suspension you will agree to pay the lender the total amount that was missed during the suspension and then resume your normal payments. Of course, this only makes sense if you’re income is going to go back up to its prior amounts and if you’ll have the lump sum of money to pay them.
Getting behind in your mortgage payments can be stressful and if you have a reduction of income it can have a snowball effect were suddenly the fees and late payments are adding up to so much that you’ll never be able to make the loan current. In this case, there may be no other option but foreclosure. However, foreclosure is something that should be avoided at all costs if possible.
