A financial hardship, such as an unexpected medical bill or car repair, a job loss, or a serious illness or death in the family, can happen to anyone. If you can’t keep up with your mortgage payments, you have options, but you’ll have to act quickly.
Contact Your Loan Servicer before You Miss a Payment
If you think you won’t be able to make your next scheduled mortgage payment when it’s due, get in touch with the company that services your loan before you miss the payment. The servicer will be more willing to work you if you’re proactive than if you simply miss payments with no explanation.
When you call the loan servicer, explain what’s going on and whether the financial hardship you’re facing is temporary or is likely to be long lasting. The servicer will also ask about your assets and other expenses.
Explore Your Options
If you’ve been thrown off course temporarily, the company might be willing to adjust your payment schedule on a short-term basis. If you expect the problem to last for a while, you’ll need to find a long-term solution.
You might want to consider a loan modification to extend your loan term or reduce your interest rate, or you might prefer to refinance. Those options can reduce your monthly payments, but it might take longer to pay off the loan, and you might pay thousands of dollars more in interest over the life of the mortgage.
You might be eligible for forbearance. If so, you’ll be able to temporarily pause or reduce your mortgage payments and pay that money later. You might be able to spread out the missed payments over a period of time or tack them on to the end of your loan term, or you might have to pay the money all at once when the forbearance period ends.
If you don’t expect your financial circumstances to improve and you think that moving is the best option, you can request a short sale. That means you’ll be able to sell your house for less than the amount you owe on the mortgage. Depending on where you live, you may or may not have to pay the difference between the sale price and the mortgage balance.
A deed-in-lieu of foreclosure is another option. If you choose that, you’ll turn over the title to your house to the lender. You won’t be responsible for your remaining mortgage balance, and you’ll be able to avoid foreclosure.
Get Help from HUD
Contact a housing counselor who has been approved by the Department of Housing and Urban Development to find out if you’re eligible for government assistance. A HUD counselor can also offer other forms of guidance.
Make sure that you only work with a housing counselor who has been approved by HUD. There are scammers out there who trick people into paying upfront fees, signing over the titles to their homes, and taking other actions that only make their situations worse.
