Falling behind on your mortgage payments can be quite stressful, as the implications often extend beyond just a hit on your credit scores, to even losing the roof over your head. There are, however, a few steps that can be taken to minimize the impact, and find alternatives to avoid a foreclosure.
One thing to remember is that homeowners have plenty of options to save their property, and a foreclosure is often a hail-mary pass by financial institutions to recover their funds. If you’re stuck in such a situation, here are some steps and tips to get you started.
1. Get In Touch With Your Mortgage Servicer
While your home mortgage is often securitized, before changing a number of hands, the mortgage servicer remains constant. They are also your single point of contact for any and all concerns pertaining to the mortgage. Their names, and contact details are often included in the policy documents, and can be reached fairly easily.
If you are experiencing cash flow constraints, or feel that you might be unable to make your upcoming payments on time, the first step is to get in touch with the servicer. Be prepared to answer the necessary questions, including the reasons for your current predicaments, whether it is temporary or permanent, among other things.
Most servicers have a number of programs to help thwart foreclosures, since it is in their best interest to keep mortgages alive for as long as possible. Whether it’s a forbearance plan, a loan modification, or a repayment plan, your mortgage servicer will do everything in their power to keep you afloat.
2. Look Into Refinancing Your Home With A New Mortgage Deal
For those struggling with their existing payments, refinancing at better terms and rates is a great way out. Beyond just unlocking the value of rising real estate values to give you much needed financial relief, depending on prevailing rates and market conditions, homeowners can substantially lower their monthly payables, as was the case a year ago, during the height of the pandemic.
While current rates are no longer favorable for refinancing, there are still options to go for a longer term for the balance amount, to reduce your payables, and bring it within your reach.
You can learn more about home mortgages, and the various shapes and sizes they come in using sites such as HomeDepot, while also comparing options and products that best suit your requirements.
3. Get In Touch With An HUD-Approved Housing Counselors
A housing counselor is essentially a trained professional, often certified by the Department of Housing and Urban Development to advise homeowners on their options when it comes to circumvent possible foreclosures.
Following a thorough understanding of your conditions, property, and mortgage terms, a counselor will use their thorough knowledge of market conditions, products, and options to guide you through the perfect way out of your quagmire.
An HUD-approved counselor has a duty to best represent the interests of homeowners who engage them. They have different fee structures, some where the homeowner themselves pay a set fee, a few others that are paid by the lender, or mortgage servicer. There are also a few counseling services provided by non-profits that are completely free of charge.
4. Request For Forbearance
A forbearance is when your mortgage servicer allows you to either pause or reduce your payments for a period of time. This should give sufficient time to help borrowers shore-up their finances before restarting payments.
As discussed earlier, it serves in the mortgage servicer’s best interest to help you retain your house, and continue paying your mortgage for the long run. As a result, they will try everything to help you overcome temporary lean periods.
If you’re going through a tough time financially, be aware that there are plenty of options available to get things back on track. With the right planning, approach, and a little bit of discipline, foreclosures can effectively become a thing of the past for most middle-class homeowners.