Your mortgage company does not want to take your house from you. They risk losing twenty to sixty on the dollar, have to deal with the legalities of foreclosing on the property and selling it at a loss. There are things you can do to keep your home and maintain a good business relationship with your mortgage company.
Do not ignore the problem. It is not going to go away by pretending it is not happening. Waiting to do something will only result in your losing your home. The quicker you act the better.
Contact your lender as soon as you realize there is a problem. Have these things ready when you call:
1. Your loan account number. 2. A brief explanation of your circumstances. Having it written down before calling will help you to your message better. 3. Pay Stubs. 4. Benefit statements from social security,disability,unemployment,retirement or public assistance. 5. Tax returns or a year-to-date profit and loss statement if you are self-employed. 6. A list of household expenses.
More than likely you will have more than one conversation with your lender. The lender will send you a “loan workout” package containing information, forms and instructions. Fill them out quickly and be honest with your statements. Return the forms quickly to the lender, who will review them before talking with you about a solution.
A housing counselor is another option. They can counsel you on your mortgage,credit issues and foreclosures.
Use this time to prioritize and work on your budget. The important bills such as insurance and mortgage should be at the top of the list. While having cable or other forms of entertainment are nice, they are not necessities. Having to give them up for awhile is better than finding yourself homeless.
Your good credit is extremely important. Your ability to purchase things, rent or buy a house often require a credit check. Working to prevent a foreclosure will keep your credit stable.
Even if you know your troubles are temporary, you should still contact your lender. There are things to help you. Short term problems that make it difficult for you to pay your mortgage can be handled by a reinstatement. A reinstatement is where you pay a lump sum to bring your mortgage up to date. A forbearance may also be required and consists of allowing for a reduce payment or suspending payments. The two are often combine when it is clear that you will have the money to bring the account current at a specific time. A repayment plan can help by allowing you to make your current payments while adding a part of the past due amount until it is current.
For problems that are more long term or will permanently impact your capability to bring your account current, there are options:
Mortgage modification: If you find yourself in the position of being able to keep up current payments, but are unable to pay of the past due amount, the lender may be able to change the terms of your loan to make the payments more inexpensive. Keep in mind the missing payment could be added to the loan balance. It could also change your interest rate. For example, an adjustable rate could be changed to a fixed rate. In addition, the time you have to pay the loan could be extended.
Other options are available depending on your circumstances. A partial claim if your mortgage is insured and special programs are available to the military. Disaster victims can get help through loan companies through the MBA. Some lenders have voluntarily have joined with the federal government to assist homeowners. A list is available from HUD.
Getting help that is safe and will help you keep your house is as close as the telephone.