Financial difficulties and unexpected life events, like health problems or losing a job, happen. Unfortunately, these events can make it difficult to keep up with your financial responsibilities, such as paying your mortgage on time. Feeling like you may lose your home is terrifying and stressful. Fortunately, you have options available to help you get back on track with your mortgage if you take action early.
It’s essential to contact your lender as soon as you realize you will have trouble paying your mortgage to give yourself multiple options. Ideally, talk to your mortgage lender before you miss a payment. If you wait until you’ve missed a payment, you’ll have fewer options available to you. If you wait too long and miss multiple payments, your lender can begin the process of foreclosure. At that point, you’ll have additional charges to pay, like late fees, attorney fees, and more. Not paying your mortgage can also negatively impact your credit score and credit report.
If you’re concerned that you’re going to fall behind on your mortgage payments or have missed payments, you can get help. The National Mortgage Relief Hotline at (888) 770-7312 can connect you with a trusted housing expert who can help you with a solution to get your loan back on track or stop foreclosure.
7 Payment Assistance Options to Get Your Mortgage Back on Track
There are payment assistance options available to help if you’re struggling to make your monthly mortgage payments. The types of choices available to you may vary based on the specifics of your loan, the reason why you’re falling behind, and whether you’ve missed any payments.
Some options are designed for short-term assistance when you have a temporary hardship that will resolve in a few months. Other options are designed to help for hardships that will have a more prolonged impact.
Before calling your lender, you may want to:
- Review the specifics of your mortgage
- Access a recent mortgage statement
- Determine an estimate of your current income and future income if there will be a change (e.g., you have a new job, but it doesn’t start immediately)
- Determine an estimate of your current expenses
- Be prepared to let your lender know the hardship you face, such as losing a job, health problems, or a natural disaster in your area
Here are seven common payment assistance options that your mortgage lender may allow you to pursue.
If you had a temporary financial hardship that prevented you from paying your mortgage, but you now can pay, a mortgage reinstatement may be the right choice to get your mortgage payments back on track. You will make a one-time full payment of everything you owe that is past due by a specific date. This payment will include the missed payments, all late fees, and any other penalties.
A reinstatement does not involve a formalized plan since you are repaying all you owe in one sum. An advantage is that your loan won’t go further into delinquency, and you can stop further damage to your credit, especially if you continue to pay your mortgage on time moving forward. Once you’ve fully paid your debt, your mortgage will be restored to its original condition, and you’ll be in good standing.
This plan works well if you aren’t that far behind, and the financial hardship is resolved. If you’re still experiencing your financial difficulty, this option may not be the right one for you.
2. Forbearance Plan
If you are experiencing temporary financial hardship, a forbearance plan may work for you. A forbearance plan either reduces your monthly payments to an amount you can make or suspends your payments for a set period. During this time, your lender agrees not to foreclose on your home.
During forbearance, your loan will continue to accrue interest. When your plan ends, you’ll need to pay the amount on your mortgage that you didn’t pay while making the reduced payments. It’s critical to understand the repayment terms before agreeing to a forbearance plan. After a forbearance ends, you may have a higher monthly payment until the missed mortgage amount is fully paid, or your arrangement may require you to pay all the amount you missed at once.
3. Repayment Plan
If you had a temporary hardship that’s now resolved, a repayment plan might be right for you. Unlike a reinstatement plan, a repayment plan involves you paying off the debt gradually, typically over a two to six-month period. During this time, your monthly mortgage payment will be higher to allow you to pay off the missed payments. Once you’ve caught up, your payments will return to their original amount.
4. Mortgage Loan Modification
If your financial hardship will have a long-term impact on your ability to pay your original mortgage payments, a mortgage loan modification may be the best option. For example, you may not be able to make the original payments because your marital status changed, you’re making less money, or you’ve had an increase in essential expenses.
You will work together your lender to reduce your monthly payment to an amount you can afford by changing or modifying your existing loan terms. For instance, your lender may reduce the interest rate, extend your loan’s length, or even forgive a portion of the debt. The specifics of the modification will depend on the agreement you reach with your lender. Your lender may also require a trial period of several months, during which you must pay on time to maintain the modification agreement.
5. Mortgage Refinance
A mortgage refinance typically involves lowering your payments by adjusting your loan term’s interest rate or length. When you refinance, you create a new loan, not modifying your original loan like in a mortgage modification.
6. Short Sale
If you’re behind on your payments and prefer to sell your home, a short sale may be a good option. In a short sale, you work with your lender to establish an agreed-upon listing price for your home, which is typically less than the full amount you owe the lender. You will manage the process of selling your home.
A short sale may have less of an impact on your credit rating than a foreclosure. A short sale is helpful when you owe more than what your home is worth.
7. Deed-in-lieu of Foreclosure
Like a short sale, a deed-in-lieu of foreclosure involves selling your home. However, instead of you selling your home, you turn the process over to your lender. You voluntarily sign your property title over to your lender in exchange for relieving all or some of your debt. This process will protect you from a formal foreclosure but will likely still have an impact on your credit.
Talking to Your Mortgage Lender Before You Miss Payments Gives You More Payment Assistance Options
Financial hardships happen, but you do have options. If making your monthly mortgage payments is a struggle, contact your lender as soon as possible. You’ll have fewer options available to you the longer you wait.
If you want free expert advice to help you solve your mortgage problem, call the National Mortgage Relief Hotline at (888) 770-7312. They will connect you with a trusted housing expert who can help you identify your options and help you find a solution.