Falling Behind on your mortgage, Now what?
What a year it’s been, definitely one for the history books! We have all struggled in one way or another this last year, so please don’t feel alone if you have missed a mortgage payment or two. The best thing you can do is stay calm and try to get in front of the problem. The most important thing to know is, YOU HAVE OPTIONS, they are different based on your circumstances. Here are a few ideas.
Fine tune your budget – now is the time to cut everything you can. If it’s not supporting your four walls put it at the end of the budget. Food, shelter, utilities and clothing are necessities. Go through your monthly statement and cancel any monthly subscriptions, those add up fast. Check out this free budgeting app that connects with your bank account, credit cards and other financial institutions. At minimum you will see how much money per month you spend on coffee.
Get in touch with your mortgage company – Even if the foreclosure process has started many mortgage companies will still work with you to reverse the foreclosure. Here are a few of the options your mortgage company may offer and some info on each one.
- Mortgage Forbearance – This is a pause in your monthly payments for a short period of time. It doesn’t erase those payments and they can be due in a lump sum or added to the end of the loan. The federal government has adjusted laws around this with the CARES Act helping protect homeowners during the global pandemic.
- Loan Modification – Mortgage companies can renegotiate the terms of your loan to reduce payments amounts by extending the length of the loan. This can be a good way to get back on track with your monthly payments and reduce the chance of tarnishing your credit.
- Short Selling – Selling your home for less than you own on it. The lender can forgive the difference owed on the home or they can ask for a deficiency judgement. This could affect your taxes and or credit score so please speak to a tax professional about your specific circumstance.
Refinance – Check with your current lender or other banks to see if you can refinance your home. They may have lower rates and you may owe less on your principal if you have been paying on the loan for a few years.
Sell your Home – If your home has become too much of a burden it may be time to sell it. There are a few ways to sell a home if that is what you decide. A home in good condition and updated to current standards, listing with a realtor makes sense. If your home is in need of large repairs/updates or you are looking for a quick sale with no inspections or appraisal your best bet may be a direct buyer like me.
I know it feels like you are all alone out there. It’s stressful falling behind but there is help. The US Housing and Urban Development has a list of approved foreclosure counselors by state. The Neighborhood Assistance Corporation of America offers rental and mortgage assistance to people in need. If your property is in Indiana the Indiana Housing and Community Development Association has several programs to help homeowners and first time buyers.
Unfortunately there are also individuals and companies that prey on people under stress. The FDIC has a great pdf with information on common scams and how to avoid foreclosure fraud. Some of the big red flags of fraud are: They ask for money upfront, Tell you to stop talking to your lender, ask you to sign documents with blank spaces or they ask you to transfer ownership of your property. Please talk with a licensed professional like a lawyer or real estate broker before you enter into a contract regarding your real estate. You can reach me directly at 317-854-6291 with any questions.
You can also fill out the form for a fast, no obligation, “as is” offer. You will receive an offer within 24 hours of your request.
