No one ever plans on not being able to pay their mortgage when they take out a home loan. But sometimes life happens and you find yourself in a difficult situation, unable to make your mortgage payments.
While this can be a challenging and stressful experience to endure, it may be a relief to know that you still have options. There are steps you can take that can help you recover financially and get back on track with your payments.
What Happens When I’m Late on My Mortgage Payment?
If you suspect that you will be late on your mortgage payment, the first thing you should do is contact your lender. This is something you should do before you’re late on a payment. Your lender may be able to work with you to come up with a plan that allows you to keep making payments. That way, you don’t risk injuring your credit score or losing your home.
If you don’t make the payment, your lender will report it. This is called a delinquency and if it’s ignored, it can have a huge impact on your credit score. Eventually, the bank may decide to foreclose on your home.
What to Do When You Can’t Pay Your Mortgage
If you and your lender can’t come to an agreement and you’re still unable to pay your mortgage, you have some other options available to you. You can try to:
- Enter into forbearance: A forbearance agreement is when your lender allows you to make a lower mortgage payment or suspends your payments for a limited period of time.
- Refinance your loan: If you have good credit and mortgage rates are lower than when you first took out your loan, you could opt for a refinance.
- Debt settlement: A debt settlement plan is when a lender agrees to accept less than what is owed on the loan. Be warned, this can and will negatively impact your credit.
- Loan modification: Your lender may be willing to modify your loan as a means of reducing your payments and making them more affordable.
- Get renters: Another option that may be able to help you make mortgage payments is to rent out your home. You may be able to rent your home for more than the amount of your monthly payment. Or you can rent out a room and use the money towards your payments.
- Short sale: A short sale is when your home is sold for less than what you owe on your mortgage. You’ll have to get your lender’s approval to do this and it will impact your credit.
- Turn over the deed: You may be able to hand over the deed of your home in exchange for partial or total forgiveness of your home loan. This, of course, will also have a negative impact on your credit.
- Declare bankruptcy: This option is not to be taken lightly. Bankruptcy will have a huge impact on your credit score and will remain on your credit history for years. But it is an option when all else fails.
Get Help from an Expert
If you have questions about missing payments after taking out a home loan, we’d be happy to talk. Call today to speak to an expert and get the professional advice you need.