Mortgage payments pending, what to do?
Falling behind on your mortgage has consequences that may even be bigger than falling behind on your rent. Not paying your mortgage will affect your credit score which may affect the kind of loan you will be entitled to in the future.
However, sometimes, circumstances can make even the most faithful person default in paying his mortgage. When this happens, there are steps to take to salvage the situation
The first step you should probably take is to inform your mortgage company.
There are usually telephone numbers of mortgage servicers on the monthly mortgage loan statements. Otherwise, you may check the mortgage loan coupon to recover their contact. As you contact them, be prepared to bear your situation to them so that they may know ways to help you. Specifically, you should give details about your income, expenses, and other assets, the reason for your inability to pay, how long the situation will last.
Many mortgage servicers have programs to help people avoid foreclosure. Depending on your situation, the mortgage servicer may find ways to mitigate losses for you.
You should also consider meeting with a HUD housing counselor who can help you understand the options presented by your mortgage servicer, and determine the best course of action.
There are also other steps to take such as:
- Finding a way to increase your income
You should take active steps towards increasing your income by finding a side gig, working longer hours, or negotiating better pay at your workplace. You should try your best to prevent falling behind in paying your mortgage.
- Planning a refinance
Depending on your situation, there are a couple of refinancing options that you can explore such as making a forbearance plan, executing a deed in lieu of foreclosure, making a short sale, or making a loan modification. A deed in lieu of foreclosure only becomes an option when foreclosure cannot be avoided. In that case, you agree to let go of the ownership of your property to the lender in exchange for debt forgiveness which may be total or partial. A forbearance plan allows you to make reduced payments or to pause payment on the mortgage for a period of difficulty. This is usually followed by a repayment plan where you make a higher monthly payment until you catch up on your previous defaults.
It is also important at this time that you learn to cut your purchases and stick to a budget.