It is very easy to panic once you fall behind on making your mortgage payments. You may imagine the worst-case scenario, losing your home to foreclosure, even if your lender has not yet contacted you to talk about the missed payments. It is important to remain calm and focus on what you can do about the situation before you lose control of it. There are many options you have after missing a mortgage payment or two, and it does not necessarily mean that you will lose your home.
Just remember that whatever action you decide to take, you must do it quickly. The sooner you can get your mortgage mess sorted, the easier it will be, and your lender may be a bit more lenient early in the process, too. Below are some tips that can help you keep your home, even when you have fallen behind on mortgage payments.
Forbearance is a term that refers to suspending loan payments temporarily until you and the lender can come to an agreement about how you are going to repay it. Many people are familiar with forbearance because they went through it with their student loan; however, it can apply to a mortgage as well. If your lender agrees to a forbearance, they will temporarily relinquish the right to foreclose on your home.
Repaying the missed mortgage payments with one lump sum is an obvious way to bring your mortgage loan current again. Of course, not everyone is able to do this. Still, talk to family and friends, consider how much you have in your savings, and at least consider if a lump-sum payment is possible for you to make. You may automatically think that it is not, because you are already experiencing financial hardship, but you may be overlooking some assets that can help. Stocks and other investments can be liquidized and your family may be more willing to step in and help than you initially think.
Lower Your Principal
Of course, if you cannot find any extra cash laying around to help pay down your mortgage debt, the other option is to reduce the amount of the loan. Many homeowners do not even consider this option because they do not believe their lender will reduce their loan balance. That is not always true, and many lenders will see the cost-benefit of reducing your mortgage debt.
The first thing to ask your lender about is reducing your principal. If you can reduce the amount that you originally borrowed, you will save yourself that money, as well as the interest on the forgiven amount. Foreclosing on a home is a long and costly process for the lender, and there is no guarantee that they will recover the full amount you still owe on your mortgage. As such, they are often quite agreeable about reducing the amount of your principal.
When a home is underwater, you may have an even better chance of getting the lender to lower your overall principal. Underwater homes have more money owing on the mortgage than the property is worth. A lender will realize they will not recover the full amount through a short sale, so they may lower your principal and allow you to remain in the home.
Reduce Your Monthly Payments
Lowering the principal amount still owed on your home is one way to reduce your monthly mortgage payments. However, there are others as well. Your mortgage includes more than just the principal amount you borrowed. It also includes items such as property tax, property insurance, and perhaps even private mortgage insurance. It is possible that the lender could change some of these terms.
For example, private mortgage insurance is only required when homebuyers do not have a down payment of at least 20 percent when they purchase their home. If you took out the loan years ago and now have at least 20 percent equity in your home, you should be able to stop paying private mortgage insurance. That is a huge money-saver that could save you thousands of dollars every year, and make your mortgage a little more affordable.
When you refinance your home, you essentially eliminate your old home loan and replace it with a new one. You are refinancing the actual home, not the loan. Due to the fact that you have a whole new loan, you are effectively starting at the beginning so that you are current on that new loan. Additionally, when you refinance your home, you can also refinance the interest rate and other terms to make your mortgage more affordable.
The U.S. Department of Housing and Urban Development (HUD) has many options for homeowners who are in fear of foreclosure. Through HUD, you can speak to a housing counselor that can outline your options, help you navigate the process and, ultimately, give you a very good chance of staying in your home.
If you are very behind on your mortgage payments and you do not see any other option, you may want to declare bankruptcy. With a Chapter 7 bankruptcy, you will have to give up the home at some point in the process anyway, but filing could help postpone it. During that time, you may be able to catch up on your mortgage payments. If you file for Chapter 13 bankruptcy, your debt is not discharged so you may be able to keep your home and create a new repayment plan with the lender.
Speak to a Florida Foreclosure Defense Attorney
Although there are many ways to get caught up on your mortgage payments when you have fallen behind, sometimes they are just not feasible. If this is the case and you feel as though your lender is going to foreclose on your home, you must speak to one of our Fort Lauderdale foreclosure defense attorneys today. At Loan Lawyers, we have helped thousands of people avoid foreclosure and stay in their homes, and we want to help with your situation, too. Call us today at (954) 523-HELP (4357) to schedule a free consultation with one of our attorneys.
Loan Lawyers has helped over 5,000 South Florida homeowners and consumers with their debt problems, we have saved over 2,000 homes from foreclosure, eliminated more than $100,000,000 in mortgage principal and consumer debt, and have recovered over $10,000,000 on behalf of our clients due to bank, loan servicer, and debt collector violations. Contact us for a free consultation to see how we may be able to help you.