Death in the family, illness, loss of a job, or divorce can take a great toll on our daily lives and finances. If tragedy strikes and you are unable to afford your monthly mortgage payments and find yourself falling behind, you may be able to modify your home loan to catch up and avoid foreclosure.
Catching Up With Late Mortgage Payments
Whether you are facing financial difficulty because of unexpected expenses, an illness, divorce, a death, loss of a job or other hardship, you may find yourself falling behind on your monthly mortgage payments.
It is essential to make your payments on time because when you entered into a mortgage contract with your lender, you agreed to do so. Not only does this help built trust, but helps keep your credit score from dropping. It will also help prevent you from defaulting on your loan and possibly having to foreclose on your home.
Thankfully, if you fall behind there are many ways you can get caught up and back on track.
Contact Your Lender
First and foremost, contact your lender if you are having difficulty making your payments. Remember, lenders want you to be able to make your payments since non-performing loans are risky for them and you run the risk of foreclosing on your home. Your lender will be more than willing to help you come up with a solution. Explain the situation to your lender and they will work with you to find a solution.
Ask About A Repayment Plan
With a repayment plan, you will work with your lender to make up a schedule where you will make your regular monthly payments in addition to the amount past due spread out over a specific period of time. The downside of a repayment plan is that you will pay more in interest.
If you and your lender agree to a repayment plan, it is essential that you make these payments on time. If you don’t, the plan could be voided.
Use Extra Available Cash
If you have available cash to put towards your late payments like a tax return, this is the fastest and least expensive way over time to repay your late payments. It is essential to remember to talk with a trusted financial advisor before you do. If you have other loans like student and car, you don’t want to find yourself falling behind on those as well. Budget responsibly.
Ask About Forbearance
If you know you will face some financial difficulty and will miss a payment or two, you can ask your lender about granting forbearance. Forbearance simply means that your lender will suspend or reduce your monthly mortgage payments for a specific amount of time. This option is for when you are facing a temporary financial hardship.
You will have to get permission from your lender first and it is critical to remember that you will have to repay the amount that was suspended or reduced. To begin the process you will need to:
- Gather the correct financial information to prove that you cannot pay your mortgage payments. Be sure to include your mortgage statements, income documentation, and other monthly debt payments.
- Explain the hardship to your lender so they can help you find the best solution depending on if it is long- or short-term.
- Contact your mortgage company to determine if you qualify for forbearance. Your lender will be able to help you through the process.