9 Things You Can Do If You Can’t Make Your Mortgage Payments

It is every homeowner’s worst nightmare when they suddenly can’t keep up with their mortgage payments. Whether you’re struggling due to the COVID-19 pandemic, or you’re out of work or struggling with finances, falling behind on your mortgage loan can become very stressful.

Falling behind with your mortgage payments can also affect your credit score. Your lender will report the late payment as a delinquency on your credit report, and you want to avoid this to protect your credit score. The longer you go without making any payments, the more negatively your credit score gets affected.

What Happens if You Fall Behind

The first thing that will happen is you will get charged a late fee if 15 days have passed since your missed payment date. After30 days of no payment, your loan will automatically go into default. Your lender will, at this point, report you to the credit bureaus as an overdue payment, which simultaneously impacts your credit score.

It’s crucial that you make contact with your lender the moment you know you cannot make a payment and remain in touch with them throughout the process. Most lenders are willing to work with you to get your payments up to date.

A foreclosure will begin once you’re 120 days late with payments, and the lender will take possession of your home and remove you from the property. The lender will want to sell your home to make enough money to pay your mortgage’s remainder. If the sale doesn’t cover the mortgage loan amount, you will be required to pay the difference. This is known as a deficiency judgment.

Thankfully, there are several options for you to help you salvage this situation.

Your Options if You Want to Keep Your Home

True Home Cost

If you want to retain possession of your home, there are multiple options to consider to avoid foreclosure.

1. Forbearance

If your financial struggles are only temporary, then your lender will consider reducing or suspending your mortgage payments for a certain period. This will happen until you can continue making regular payments.

2. Refinance Your Loan

Refinancing can be a good option if you still have a good credit score. If you pay a high-interest rate on your current mortgage loan, consider refinancing your home to a lower interest rate to reduce your payments.

Refinancing your loan can also get done by extending your mortgage loan term to a more extended period. By agreeing to this option, you will end up paying more interest over the long term.

3. Loan Modification

You can get your monthly payments lowered through a loan modification program. Keep in mind that there are various types of loan modifications, and they won’t all impact your credit history the same. Certain programs will come across as a loan modification, where they are debt settlement plans.

4. Debt Settlement

If you can get a debt settlement plan, your lender will accept less than the entire sum owed on the mortgage loan. Be aware that this process will also negatively affect your credit history.

5. Repayment Plans

A lender will consider offering a repayment plan if you are behind on payments to help you catch up. These payments might be higher than your regular monthly payments.

Your Options if You Can’t Keep Your Home

You could find yourself in a situation in which keeping your home is no longer an option. If this is the case, then consider the following options:

1. Sell Your Home

Selling your home might be the best option for you if your home is worth more than you owe. Make contact with a real estate agent in your area to help you with the different options they have to offer.

If you need to sell your home quickly, consider selling your home for cash. Cash sales can be as short as seven days, helping you get out of a sticky situation quicker.

2. Rent Your Home Out

If you can rent out your home and get enough rental income to pay for your mortgage loan, this can be an excellent option. This will be even more beneficial if you can get more than your monthly mortgage contribution from a rental.

Even though you will be renting out your home, you need to remember that you will still be responsible for taxes, repairs, and insurance.

3. Short Sale

A short sale is a good option if you owe more than what your home is worth. A short sale occurs when your lender accepts an amount you get when you sell your home as full payment on the loan. This will still occur if you sell it for less than what you owe.

A short sale will hurt your credit score even though it appears “settled” on your credit report.

4. Deed in Lieu of Foreclosure

A deed in lieu of foreclosure occurs when you agree with the lender to give them the deed to your home in exchange for being released from the mortgage loan. This option will also negatively impact your credit score.

By entering into this agreement, you will voluntarily hand over your ownership of the property, and is the best option if you are facing foreclosure.

What to Do Next

Ensure that you fully understand the implications these options will have on your credit score before you enter into any agreement. If you need advice, consider speaking to a financial advisor to understand where you are financially.

Consider getting more information and guidance from a qualified counselor near you through the National Foundation for Credit Counseling.

We Can Buy Yor Home for Cash

If you face foreclosure or feel it’s the right thing to do to sell your home, contact us. We buy houses in any condition through our “Fast Cash Offer” option, so you don’t need to concern yourself with repairs. There are zero fees and zero commissions involved!

We won’t waste your time, as we pay cash and move quickly.

If you want to discuss your situation further or need a free no-obligation cash offer, call us today at 781-309-7085!

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