There are all sorts of reasons why a homeowner may struggle to make mortgage payments.
The main ones include too high monthly installments due to adjustable interest, loss of employment income and unexpected high emergency expenses.
If you are unable to keep making the payments, you must take action right away to fix the problem and prevent further trouble.
Consider the main solutions available.
Refinancing If you have managed to pay your last installment but you see trouble coming, you should check out the available mortgage refinancing options right away.
It is true that this solution comes with considerable closing costs, but they can be bundled into the new loan.
Even if you are not able to secure much lower interest, you may be able to extend the term of the loan so that the new monthly payments are much lower.
You should give this option a try because it can protect you from default and from losing your home not just for a short period of time, but for many years to come.
Modification This is the primary option for individuals who have already missed a payment and who cannot find enough money to make the next one.
You must contact your lender immediately and discuss loan modification.
You need to keep in mind that lenders are much more willing to rearrange the repayment schedule than to deal with a foreclosure so you have good chances of success.
There are various mortgage modification solutions available.
The lender can extend the term of the loan, add the missed payments to existing balance so that they can be made later on or even lower the interest rate.
HAMP The Home Affordable Modification Program (HAMP) has been in place since 2009.
Its purpose is to reduce the participant's mortgage payments to 31% of their pre-tax income.
It is designed to help individuals who are delinquent or are in serious danger of delinquency.
You can take advantage of HAMP if you meet the eligibility criteria and if your lender participates in the program.
It is certainly worth exploiting this opportunity.
Forbearance This is a temporary solution which is available from virtually all lenders.
Under the forbearance agreement, the lender modifies the loan payments or postpones the repayment of the loan for a certain period of time, typically 90 days.
After this period expires, the borrower will have to go back to the previous repayment schedule and may have higher monthly installments due to the temporary change in the repayment.
This temporary solution can help if nothing else works.
It can be useful if you are looking for an affordable refinance deal as well.
Other Options If you have an FHA loan, you can make a partial claim on your insurance.
In this case, your mortgage will be made current and you will have to pay the executed Promissory Note after repaying the new loan balance in full.
You can also try renting your property.
This can be a highly efficient option especially if you can rent it for what you owe to the lender every month and possibly for more.
You should exploit all of your mortgage repayment options before considering a short sale or foreclosure.
The main ones include too high monthly installments due to adjustable interest, loss of employment income and unexpected high emergency expenses.
If you are unable to keep making the payments, you must take action right away to fix the problem and prevent further trouble.
Consider the main solutions available.
Refinancing If you have managed to pay your last installment but you see trouble coming, you should check out the available mortgage refinancing options right away.
It is true that this solution comes with considerable closing costs, but they can be bundled into the new loan.
Even if you are not able to secure much lower interest, you may be able to extend the term of the loan so that the new monthly payments are much lower.
You should give this option a try because it can protect you from default and from losing your home not just for a short period of time, but for many years to come.
Modification This is the primary option for individuals who have already missed a payment and who cannot find enough money to make the next one.
You must contact your lender immediately and discuss loan modification.
You need to keep in mind that lenders are much more willing to rearrange the repayment schedule than to deal with a foreclosure so you have good chances of success.
There are various mortgage modification solutions available.
The lender can extend the term of the loan, add the missed payments to existing balance so that they can be made later on or even lower the interest rate.
HAMP The Home Affordable Modification Program (HAMP) has been in place since 2009.
Its purpose is to reduce the participant's mortgage payments to 31% of their pre-tax income.
It is designed to help individuals who are delinquent or are in serious danger of delinquency.
You can take advantage of HAMP if you meet the eligibility criteria and if your lender participates in the program.
It is certainly worth exploiting this opportunity.
Forbearance This is a temporary solution which is available from virtually all lenders.
Under the forbearance agreement, the lender modifies the loan payments or postpones the repayment of the loan for a certain period of time, typically 90 days.
After this period expires, the borrower will have to go back to the previous repayment schedule and may have higher monthly installments due to the temporary change in the repayment.
This temporary solution can help if nothing else works.
It can be useful if you are looking for an affordable refinance deal as well.
Other Options If you have an FHA loan, you can make a partial claim on your insurance.
In this case, your mortgage will be made current and you will have to pay the executed Promissory Note after repaying the new loan balance in full.
You can also try renting your property.
This can be a highly efficient option especially if you can rent it for what you owe to the lender every month and possibly for more.
You should exploit all of your mortgage repayment options before considering a short sale or foreclosure.
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