In some cases, falling behind on mortgage payments is unavoidable. There can be unexpected medical bills, sudden loss of employment, divorce, and other reasons that can render you unable to pay for the mortgage. However, you don’t have to deal with this yourself. If you’re starting to miss mortgage payments, these are the best places you can turn to for help:
1. Your lender
Your mortgage lender will extend their help to you before they start serving court papers to your house. They don’t want you to lose your home since it is also non-beneficial for them. That said, turn to your mortgage lender first as soon as you start to struggle with the payments. There are many ways with which you can work with your lender to avoid foreclosure, such as:
- Reinstatement and forbearance. This option temporarily suspends your mortgage payments until you can get back on your feet. After the forbearance period, you can either pay the arrears with a lump sum or through installments.
- Loan modification. When you ask your lender to modify your loan, they might agree to extend your loan term, decrease your interest rate, or extend the balance, among other strategies to avoid foreclosure.
- Payment plan. If your financial troubles are temporary, you can negotiate a repayment plan with your lender that will allow you to pay back the arrears on top of your monthly mortgage payment after you get back on track financially.
- Mortgage refinancing. You might have to work with another lender to refinance your mortgage, and this can have higher interest rates, but refinancing your mortgage can help you avoid foreclosure for the meantime.
2. Your real estate agent
If other options that will allow you to keep your house are not applicable, you can ask your lender to grant you a short sale. If they agree, you can then approach a real estate agent that is well versed in short sales to help sell your house.
When you sell your house through a short sale, the money goes to your lender and the remaining debt is waived. However, since you will lose the equity to your home, consider this option as a last resort.
If you’ve acquired your house through a Veteran Affairs (VA) loan, a Federal Housing Administration (FHA loan), or other government-backed loans, you can approach them directly when you’re starting to struggle with your mortgage payments. There are also other government agencies, such as the US. Department of Housing and Urban Development (HUD) that offer foreclosure assistance, which can help you stop the foreclosure process and negotiate with your lender.
4. Friends and family
Find a friend or family member that might be willing to buy your house from you and let you lease it to avoid losing your home entirely. If they are unable to do so themselves, ask if they know an investor that is looking for this type of opportunity. But if they are willing to lend you money, you can try borrowing the amount you need to pay off your arrears so you can avoid foreclosure.
When you take out a mortgage, the last thing on your mind will be to lose it to foreclosure. However, certain circumstances can put you in a tight financial spot. If you are facing foreclosure, these are the first people or places you can approach for assistance.