We all face financial hardships from time to time. Job loss, medical issues, and financial emergencies (such as a broken-down car) can all make it hard to pay the mortgage.
After a few months of missing mortgage payments, your lender may be contacting you. Your home may even be going through pre-foreclosure, which is the first step in the foreclosure process. The property is in the process of being repossessed, and the homeowner has a limited time to get caught up on payments or lose their home.
This can be a stressful situation, as nobody wants to be homeless. While not being able to make your mortgage payments is an embarrassing situation, you do need to be proactive if you want to save your home. So don’t just ignore the situation. Here are some things you can do to prevent a foreclosure from taking place.
Communicate with Your Lender
As soon as you realize you may have trouble making payments, reach out to your lender. Provide your lender with details about your financial situation. Many lenders offer assistance programs.
Consider Your Options
Your lender might offer options such as forbearance, loan modification, or a repayment plan. In a forbearance, the lender agrees to temporarily suspend or reduce your monthly mortgage payments. This option is best when you only need a few months of relief from your mortgage payments, such as when you are in between jobs.
A loan modification changes the terms of your mortgage loan to make your monthly payments more affordable. Lenders may lower the interest rate, extend the loan term length, or forgive a portion of the principal amount.
A repayment plan can help when you have missed one or two payments. The lender agrees to spread out the past-due balance over months or years.
Open All Mail from Your Lender
Again, do not ignore the situation. Make sure to open all mail from your lender so you can understand the situation and all available options. Provide the lender with any information they need.
Know Your Mortgage Rights
Review your loan documents to understand the terms of your mortgage and the rights you have as a borrower. Familiarize yourself with the foreclosure laws and regulations in your state.
Refinance
If you have enough equity in your home, refinancing might lower your monthly payments. Compare offers from different lenders to find the best refinancing options.
Seek Professional Advice
Work with a housing counselor from the Department of Housing and Urban Development (HUD) who can provide free or low-cost advice. Consult an attorney who specializes in foreclosure to understand your rights and options.
Nobody wants to lose their home, but if you’re behind on payments, foreclosure is a possibility. It’s best to discuss the situation with your lender to understand your options.
If nothing else works, then contact a good bankruptcy lawyer. A bankruptcy lawyer has experience stopping foreclosures and other issues related to finances. Let them assess your situation and advise you on the best plan of action. Filing for bankruptcy will halt the foreclosure process and it may even be possible to keep your home when filing for bankruptcy.
