What Steps to Take when you Cannot Make your Mortgage Payment?
Buying a home is one of the most important and most exciting decisions in one's
life. But losing a home due to financial difficulties is one of the most painful
events in a person's life. Coupled with the fact that the home may be a happy
place filled with children, pets and family makes the process of losing a home
even more heart wrenching. The sad reality is nowadays people do not lose homes
because they are deadbeats walking out on their debt but rather the economy is
tight and many people lose their homes through no real fault of their own.
To make matters worse, once one has defaulted on just one payment and the
service charges kick in, the situation starts to look hopeless as more and more
money is owed and there may be little or no money coming into the household.
When faced with the difficult task of missing mortgage payments, however, there
are some proactive steps that one might take to help the situation in the short
term.
- As embarrassing and as demoralizing as it feels, try not to hide your
situation from the lenders. It is not necessary to tell them everything but at
least let them know that you are having problems but are taking steps to
ameliorate the situation. Do not hide by ignoring the lenders, as they will not
go away.
- Speak to the lenders about renegotiating the mortgage. It may be possible to
take out a longer amortization period paying less per month. Sometimes the
lender will add the payment and charges to the backend of the mortgage allowing
the payer to skip a month if the situation is temporary.
- If you know that you are not going to be able to pay the mortgage for the
next few months, do not wait for the lender to foreclose. Make a decision to put
the house on the market and try to sell it before action is taken against you.
Again, let the lender know what is happening and that you would like time to get
the house ready, list it and sell it.
- If you are not paying your mortgage because you have spent unwisely and still
have the same employment, then it is important to seek credit counseling and
possibly assistance in setting up a budget and paying off your creditors.
- Speak to a mortgage broker. While most people believe that they are defeated,
there are many lenders who are agreeable to risky deals. The broker may be able
to find a better interest rate or longer terms in order to help you through the
difficult times.
- Remember that most lenders do not want to foreclose. They are not in the
business of selling homes. They just want their money and will usually listen to
a well-thought out proposal. But you must take the first step and create a
plausible plan.
Some areas have Mortgage Default Counselors who can explain the legal
ramifications of the situation and in some instances, speak to your lender on
your behalf.
In summary, the only way to get help is to ask. And it is true that most people
actually become paralyzed when they cannot pay make their mortgage payment. The
fear stops them from acting and they almost deny the situation hoping things
will turn around. The problem is that while they are trying to come to terms
with everything, valuable time has been lost. The end goal is to avoid
foreclosure or losing equity in the home so it is in everyone's best interest to
take action immediately.
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