Over 11 million American homeowners are behind in their mortgage payments. If you’re behind on payments to your lender, and you don’t know what to do or who to call, don’t worry. You’re not alone. Calling and talking to your lender is a good first step. However, there are other things you can do besides asking for an extension. Take a breath, and don’t worry—we’re here to help.
Being transparent with your mortgage lender is the best way to make sure you’re able to stay in your home. If you know you’re not going to be able to make a payment for a month or two, call your lender. They may be able to offer you assistance before a missed payment negatively affects your credit score. However, if you’ve already missed one or two months of payments, it’s still worth getting in touch to find out what offers or plans they might be able to offer. The more information you can give them about your situation, the better. Lenders want you to be able to pay them. They don’t want the hassle of having to foreclose on your home if they can help it.
If your current financial situation is temporary and you believe that you’ll be able to resume payments at a certain time, your lender may propose the option of forbearance. This means they may be able to reduce or suspend your payments for the time being. They can then start them back up as normal when you are able.
Some lenders offer what is called a loan modification program or a debt settlement plan. These are different depending on the lender, but it’s worth looking into them in detail. Debt settlement programs can have a negative effect on your credit rating, so it’s worth knowing all the facts first. Loan modification programs are safer in that respect, in that your credit score won’t automatically be affected. However, if a lender does modify your loan so that your payments are smaller, they will expect you to be able to pay those amounts back in full. If not, like any loan, you may see unwanted changes to your credit score.
Most lenders will be able to come up with a repayment plan to help you catch up on your missed months. This is an especially good option is you’re only a month or two behind in payments. Once you are able to start paying your mortgage again, the lender will increase your monthly payment. They can do this as long as is needed to catch up on your past due balance.
Homeowners who have missed mortgage payments but have good credit can refinance loans at a lower interest rate—one that is easier to repay. In the long run, you will end up paying more interest, but for the short term, it’s a great way to reduce your monthly cost and keep hold of you home.
Federal law states that you have a 120 day pre-foreclosure period to sort out a new plan with your lender. Within this time, you can fill out an application for help to prevent foreclosure of your mortgage. Your lender will then evaluate your situation and determine new options for repayment. Technically, as long as you complete the form 37 days before a foreclosure sale, you can still be offered repayment options. Occasionally, no options are offered. But in general, as long as you don’t turn down the options available to you, you should be fine. Make sure to abide by the mitigation agreement so that you can stay in your home.
The U.S. Department of Housing and Urban Development offers counseling by HUD approved agencies. In Wisconsin there is a long list of financial counseling services available to residents who need advice on how to proceed with their mortgages. For little or no charge, they can also help you set up a financial plan to make it easier for you to manage payments in the future.
HUD also provides competitive mortgage grants at a state level. These grants can help low-income minority homeowners who are behind on their mortgage payments. The forms are long and in-depth. However, if you fit the criteria, you could be one of the lucky people who receives grant money each year. Millions of dollars are given to homeowners each year in order to help them stay in their homes. Most of the grant money given in these schemes does not ever need to be repaid. However, you will have to show proof that you are using the money specifically for your mortgage.
Habitat for Humanity offers a Mortgage Foreclosure Prevention Program in three locations across the United States. They also offer free counseling and referrals to struggling homeowners. There is around $35,000 of available funding to give out each year to those who qualify.
On a more local level, single mothers can be offered housing assistance through Community Block Development Grants. You can read more about that here.
If you are struggling to pay your mortgage, please don’t hesitate to contact us. We can help! We understand that falling behind on your monthly payments is an emotional experience, and we take this topic very seriously.