The thought of losing your home is terrifying. With so many people having financial difficulties and the housing market still sinking, millions of Americans are trying to cope with this frightening situation. If you are currently behind with your mortgage payments, it's important to contact your loan servicer as soon as possible. Most mortgage companies will be happy to talk with you and let you know the various options you have concerning your home loan. Don't ignore the situation. The sooner you contact your mortgage company, the better your chances of finding a workable solution.
Here are some options which may be available to you if you are having trouble making your mortgage payments:
- Reinstatement - If your current financial problems are temporary, this may be an option for you. With reinstatement, you pay the loan servicer the total past-due amount, including all penalties and late fees, by a date that you both agree to. Your account is brought current.
- Repayment Plan - If you have only missed a few payments, you might want to consider a repayment plan. The mortgage company takes your past due amount, divides it into equal amounts and then adds each portion to upcoming payments. It would be a fixed amount of time that both you and your loan servicer agree to.
- Forbearance - This is when your mortgage payments are reduced or suspended for an agreed upon amount of time. After this period, you begin making regular payments once again as well as a lump sum payment or partial payments until the account is brought current. Forbearance normally works best when your income loss is temporary and short term. If you are in a home which you can't afford, it won't help.
- Loan Modification - Loan modifications have been in the news lately as more and more Americans scramble to hold on to their homes. With a large percentage of mortgages now "underwater"- that is, the mortgage amount owed is greater than the market value of the home- many people are requesting loan modifications. This occurs when you and your mortgage servicer agree to permanently change the terms of your mortgage, thereby making the monthly payments more manageable. This can be achieved by reducing the interest rate, extending the term of the loan, or adding missed payments to the overall balance.
- Selling Your Home - Most people don't want to consider this option, but it is one which should be considered. A lot depends on the housing market in your specific area. If you can sell your home for more than the mortgage amount and make some type of profit, you might want to explore the possibility.
- Bankruptcy - This is normally considered a last resort option, mostly because of the serious ramifications of declaring bankruptcy. A bankruptcy stays on your credit report for 10 years and can affect your ability to get new credit, purchase another home, and even get a job. But it is a legal option to which every person is entitled. If you see no way out of the financial hole you are in, you may want to look into bankruptcy as a viable option.